Yell of delight

10 July 2003

The directories group’s flotation has come off nicely, at a price comfortably above the midpoint of the indicative range. Healthy shareholder interest has allowed private equity to extract an extra £330m but the price is scarcely bold.

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Yell has priced its initial public offering at 285p a share, above the midpoint of its 250p300p indicative range. The decision puts the equity value of Yell at approximately £2bn.

The company is issuing 152 million shares as a primary offering. This will raise £433m of proceeds, which net of fees will allow it to reduce its debt to £1.3bn.

The company's shareholders, principally the private equity investors Apax Partners and Hicks, Muse Tate and Furst, are selling 248 million shares as a secondary offering, raising £707m. That compares to their original plan to raise £417m from the secondary offer. If a 15% overallocation option is taken up, the shareholders will receive a further £171m of proceeds, against £128m that they stood to realise had the global offering been kept at its originally planned size. Total extra proceeds to the shareholders are therefore £333m. As well as the private equity funds, managers are selling shares as part of the secondary offer.

The flotation was conducted on an unusually compressed timetable. A Pathfinder prospectus was issued on 1 July, with pricing eight days later. The company's bankers had, however, conducted extensive premarketing of the offer with financial institutions. According to a person familiar with the flotation, the issue was subscribed six times at the offer price.

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