Business World

Thursday 18 January 2018

Misys stock flop adds to a dismal run for IPO market

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Click to view full size graphic

Dasha Afanasieva and Rachel Armstrong

After struggling for weeks to woo buyers for a proposed public offering, financial software firm Misys scrapped plans to relist on the London stock market, blaming shaky market conditions and adding to a run of aborted flotations in recent weeks.

Misys is the largest initial public offering (IPO) to be pulled or postponed in London this year amid investor caution about pricing and the outlook for markets. The company said this month it hoped to raise around £500m (€555m) by selling a quarter of the company through the IPO, but underwriters scaled back the offering after finding it hard to sign up investors.

Reflecting caution about UK assets after Britain's June 23 vote to leave the European Union, investors discounted Misys to half the value of Swiss banking software rival Temenos, Reuters reported, citing sources close to the deal.

The London-based supplier of software used to run banks and corporate treasury functions managed to cover the offering earlier after a week of book building but nonetheless pulled the offering on Thursday.

"Despite encouraging institutional support Misys ... has decided not to proceed with its potential initial public offering at the current time due to market conditions," the company said in a statement.

Uncertainty over the Brexit vote has hit the value of companies listing in London, which fell to the lowest level in four years in the first nine months of the year according to Henderson Managed Investment Trusts.

Also complicating the listing of Misys shares are jitters about the poor stock performance of recent tech IPOs. The decision to pull its listing came a day after Spanish telecoms firm Telefonica said it would not list its British mobile business in 2016 and would only go ahead in 2017 if market conditions improved.

Even the biggest IPO of the year so far, that of medical products maker ConvaTec, was done at the bottom of its planned price range.

Misys was a familiar name to British investors until two abortive merger attempts with rival bank software makers led it to accept a private equity buyout from Vista Equity Partners, which paid £1.27bn (€1.41bn) for it in 2012.

Its US owners put it up for sale in 2014 but failed to find a buyer, leading it to test demand for an IPO. Swiss rival Temenos walked away from merger talks with Misys in 2012, and the British company used its years in private hands to restructure its business, consolidate multiple product lines and expand into areas such as trading and risk management.

In some ways Misys should be well-positioned. The market for financial software is finally growing again after many banks froze spending on outside suppliers in the wake of the 2008 financial crisis and slashed non-core businesses. Regulatory and customer pressure is now seeing the trend reverse. (Reuters)

Irish Independent

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