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On the money

New Look's initial public offering has been put on hold as the markets cool

Last week I made all the wrong calls (yes, journalists are not infallible).
On this occasion the subject was New Look, its IPO and the role of its finance
director Alastair Miller.

In short, just a few days before, New Look revealed it was going to return to
the markets in a bid raise £650m in investment capital and money to pay off
debts.

The company had appointed a new set of non-executive ­directors and its
releases, at least, sounded bullish on the developments that would take place
once the money was
in hand.

By Friday morning of last week, the whole thing had been called off. The
markets, we were told, had cooled.

It took many in the City by surprise, but perhaps we should have taken the
otherwise innocuous remarks of Miller more seriously.

During the launch of a new flagship store on Oxford Street, Miller was
reported saying: “Nobody’s found the last couple of days comfortable.”

On the face of it, it looked like a remark about the hard work and
preparation that had gone into preparing the flotation.

Now we can see the FD might have been giving us a more candid insight.

Readers of runes might have spotted it but otherwise the words passed
unremarked.
It’s another illustration of the tight spot FDs still find themselves in, even
those that appear to be doing well. The recession has complicated ­decision
making and placed extra pressure on the role of the FD to make the right calls.

My piece wondered at the time how much his career might benefit from a
successful completion of the IPO.

The risk from such an abrupt cancellation is that suddenly it appears as if
the management had not prepared properly and had misread the markets.

There is a bigger problem for Miller. He is in charge of e-commerce and
strategic
planning, both of which will suffer as a result of not having the investment
money from the IPO.

Miller will have to go back to the drawing board and work out what happens
now – never a happy moment, especially when it happens so publicly.

But his experience might just serve as a lesson for other FDs caught up in
IPO fever.

Some have still gone ahead, but there will be other FDs out there now urging
caution when the word flotation is mentioned.

Gavin Hinks is editor of Accountancy Age

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