Man Utd shares kick off with slow run
Shares in Manchester United made a muted debut as they opened for trading on Friday just above their initial public offering price.
The failure of the shares to “pop” on its trading debut on the New York Stock Exchange was a second blow for the listing, after underwriters lowered the price to $14 late on Thursday, after pitching the offering to investors with a range of $16 to $20.
It means the football club and its owners have raised about $234m from the sale of 16.7m shares. That is nearly $100m lower than the $330m implied at the top end of the price range. The sale of the 10 per cent stake leaves the club with a market capitalisation of less than $2.5bn.
“We felt it was more appropriate to price at a level which gives the stock a firm foundation,” Ed Woodward, vice-chairman of Manchester United told the Financial Times. He said there were quality institutional investors willing to own shares at $14, which swayed the decision to list at that price.
The muted early trading on the NYSE came as local children played five-a-side football outside the exchange whose façade was covered by a huge red Manchester United banner. “Welcome to Manchester on Wall Street,” boomed from a loudspeaker as the club’s mascot “Fred the Red” bounded near the touchline.
On the trading floor, covered with artificial turf, many stock traders wore the football club’s red shirts marked with “MANU-LISTED-NYSE” on the front.
After executives of the football club rang the opening bell from the balcony overlooking the floor, a crowd surged around the trading station of Getco, the brokerage firm or designated market maker responsible for the stock. One Getco trader wore white shorts and black socks with his United shirt.
As the lead trader at Getco conversed with bankers on the telephone, gauging the strength of orders, he shouted out amounts that rose from 1.5m to 2.3m shares and indications of prices to other floor traders. After several minutes, orders across the book were balanced and the stock officially opened for trading at $14.05.
Shares rose to a high of $14.20 on a turnover of 23m by midday in New York.
According to one person familiar with the listing, Jefferies, the lead underwriter on the IPO, was forced to step in and buy the shares to prevent the stock slipping below $14.
“Jefferies is stabilising the shares,” said the person.
The pricing sheet for the offer makes Jefferies responsible for stabilising the share price, according to two people involved in the listing.
Jefferies declined to comment.
Credit Suisse and JPMorgan Chase were the other lead underwriters on the deal.
The Glazer family, who own Manchester United, had originally hoped to raise as much as $1bn through a listing in Asia, when an IPO was planned last year.
The dual-class shareholder listing in New York was seen by analysts as being pitched too high as it implied an expensive enterprise value to earnings before interest, tax, depreciation and amortisation of more than 20 times.
“We are a growth company,” said Mr Woodward. He said the company’s pillars of growth include revenue from broadcast television rights, sponsorship opportunities such as the recent $559 seven-year deal with General Motors’ Chevrolet brand and tie in with Nike, and digital media.
“We have a community of fans and digital media has narrowed the gap between us and the fan,” said Mr Woodward.