COMMENT
Companies That Float Twice

After a two-year absence Pizza Express plans to return to the stock market. The pizza restaurant, which is now owned by Gondola Holdings, said it wants to sell shares through a flotation to reduce debt and finance new restaurant openings.

Gondola Holdings, which also operates restaurants under the Ask and Zizzi banners, is expected to be valued at £450m, though it may be worth as much as £900m after debt is included. However, it is unclear why investors will want to back a business that was de-listed just two years earlier amidst concerns over its deteriorating sales and question marks about its future.

In fact, are such 're-floats' ever a good bet?

Unfortunately, there are not that many stock market re-floats on which to draw a meaningful conclusion to that question. Generally, businesses that have been de-listed do so because they have been gobbled up by larger concerns, or because they have simply gone bust. Consequently to de-list and subsequently re-float is unusual.

That said ReNeuron (LSE: RENE) listed, de-listed and re-floated within a five-year time span. The stem cell specialist was brought to market by biotech baron Sir Christopher Evans in 2000 with a market value of £70m. But with no drugs in the pipeline, and no meaningful licensing deal, Evans bought it back for just £3.6m in 2003. He subsequently re-floated the business in August 2005 for £23m. The round-trip may have been highly lucrative for Evans, but it has been considerably less so for investors!

IG Group (LSE: IGG) is another company that has re-floated after a brief time in private hands. Venture capitalists CVC Capital de-listed IG Group when it bought the spread-betting company for £143m in 2003. At the time, company founder Stuart Wheeler said he wanted to sell his 24% stake to help finance the renovation of his castle in Kent! Whilst in private hands, new products such as fast-growing binary betting platforms were introduced. When IG Group was re-floated in April 2005, it commanded a price tag of £400m - today it is worth £514m.

Clearly flotations of previously listed companies need to be judged on their merits in the same way that any flotation should be evaluated. However, additional consideration should perhaps be given to why the shares were de-listed in the first place. On that basis, Pizza Express, shorn of the entrepreneurial touch of former boss David Page, does not taste quite as good as it did. Consequently, I'd sooner give more consideration to Page's new restaurant venture Clapham House (LSE: CPH), which comes without legacy baggage.

> Flotations To Avoid | What Venture Capitalists Do | Why I Like Hot New Issues