UK - Schemes have been warned against buying shares in the recently floated Yell Group.
Bedlam Asset Management chairman Jonathan Compton said he was surprised Yell shares were so highly sought after. He pointed out that an unsuccessful offering in 2002 valued the company at £1.3bn but now the company had been floated with a valuation of £2bn.
Compton said: “What on earth has transformed the company into a market darling in only a year?”
Compton doubted whether the shares would make investors a lot of money, although he conceded a price rise was likely because of the certainty of its inclusion in the FTSE100 and consequent interest from tracker funds.
He said: “The very fact venture capitalists are selling it back to the public indicates that they believe they have the best possible return on their investment and better returns lie elsewhere.
“Meanwhile, your forever-tracking fund manager knows better than the owners, managers and bankers and has decided it is a ‘must have’ deal.”
Yell Group was floated on July 10 in the largest UK IPO for two years.
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