The backlash against overvalued flotations in London seems to be sounding alarm bells amongst company’s looking to list, with legal firm Vannin Capital reportedly lowering its valuation to between £600mln-£700mln from a previous estimate of £1bn.
Despite an uptick in the legal services sector following a deluge of PPI and other financial crash-related claims against large banks such as Lloyds Banking Group PLC (LON:LLOY) and Royal Bank of Scotland Group PLC (LON:RBS), the recent spate of overvalued IPO flops seems to be causing investor restraint.
By lunchtime, the stock was down 5% at 1,614.4p, a 15% cut to its float price of 1,900p when it listed last Wednesday.
Following Aston’s lead was fellow IPO flop Funding Circle Holdings PLC (LON:FCH), which was down 1.9% at 336p and suffering from a nearly 25% reduction from its float price of 440p, making it one of the worst first-week performers of any British float.
The two IPOs have recently drawn ire due to what many investors see as an overvaluation of a company, particularly evident with Aston Martin’s tendency to go bankrupt (seven times at the last count).
The car makers valuation has also been criticised for its valuation compared to fellow luxury car maker Ferrari, which carried a similar price/earnings multiple despite having a stronger brand, a larger order backlog and better profit margins.