Misys, a former FTSE 100 software company, is cutting a deal to be listed on the London Stock Exchange after being privately owned for four years. It is cutting its value after a wave of failed listings and cut-price valuations. Misys is likely to be valued at £3.25 to £3.75 billion — around £1 billion less than it initially sought.
At its initial valuation of around £5.5 billion, Misys would have entered the FTSE 100, but it might not be able to do so now. EasyJet is the least valuable company in the index, with a market cap of £3.5 billion. “The drop in sterling hides the magnitude of [Misys’s] devaluation… The IPO market is tough at the moment and investors are pushing back on price. U.K. investors are saying that Misys should be priced at a discount to Sage,” said a source. Sage is a U.K. software group that suffered a data breach in August.
Misys’ private equity owners, Vista Equity Partners, will realize a profit despite the cut in its value. The equity group bought Misys in 2012 for £1.3 billion after the London banking software group had recovered from the dotcom boom and bust of the late 1990s. Misys float will still be the biggest technology IPO in London, Sophos floated for £1 billion in 2015, and it is a big jump compared to Misys valuation when it was first listed in 1987 at £8 million.
But Misys is not the only company in Europe affected by the post-Brexit aftermath. Biffa, the waste management company, slashed its IPO by a third and was negotiating with investors in attempts to salvage its planned listing. TI Fluid Systems, the auto parts maker, claimed that volatile markets forced it to abandon its IPO. Pure Gym Group, also announced that it was abandoning its flotation because of market uncertainty, and IVG Immobilien in Germany stopped plans to list OfficeFirst.
Companies don’t see much advantage in turning to public markets when interest rates are so low. Compounding sluggish business is poor performance by large companies such as Nets, a Danish payments company. Nets’ share price fell 10 per cent after its IPO. Innogy, a green energy business touted to be a hot IPO this year has had a flat share price since listing last week.