London Briefing: Retail billionaire Mike Ashley may not have chosen the best day to float his Sports Direct empire yesterday but, even as shares suffered widespread falls, he still collected a cheque for £929 million (€1.38 billion).
Despite some disquiet over how the business is run, institutional investors snapped up the offer. Strong demand saw the issue oversubscribed and pushed the price to 300p a share, towards the top of the earlier indicative range of 250p-310p.
The shares Ashley sold represent a 43 per cent stake in Britain's largest sports retailer, which takes in 465 outlets, including the Sports World discount chain and brands like Dunlop, Lonsdale and Slazenger.
Its sales for the year to end April 2006 totalled £1.2 billion and profits were £145 million.
Publicity-shy Ashley retains control of the newly floated £2 billion-plus company through his ownership of the remaining 57 per cent of the shares. Although he has an option to sell a further 46 million shares - which would take his cash proceeds over the £1 billion level - he has made a commitment not to make any further disposals for two years.
This commitment helped to counter worries among some investors over corporate governance issues at the group.
Although Ashley is the majority shareholder, he will hold the unusual position of unpaid executive deputy chairman rather than chief executive or chairman.
Former Whitbread finance director David Richardson has been brought in as a non- executive chairman and Ashley's long-standing business partner, Dave Forsey, will be chief executive. It is not hard to imagine, however, whose views would hold sway in the boardroom should there be a disagreement over strategy.
For any share sale, but particularly one of this size, directors would be expected to press the flesh and take investors and the financial press through the details of their strategy.
Not so Ashley, who has lived up to his reputation as "Britain's answer to Howard Hughes". The fear of missing out on the float persuaded investors to put aside those concerns.
But if institutional investors find they do not like the way the business is being run, or that they are denied access to its reclusive chief, they will hardly be in a position to complain.
Investors get taste for Tesco bond
Another offer from a retailer went down a storm this week as Britain's biggest supermarket group, Tesco, took the rare step of issuing a 50-year bond.
Such was the demand for the £500 million bond, which Tesco is using to refinance existing debt, that it sold out in just two hours and could have been sold four times over. Behind the huge demand is the appetite of pension funds for long-dated assets to match their long-term liabilities. The bond has a yield of 5.2 per cent; while equities may offer greater returns, bonds offer longer-term security.
There are few other firms where investors would happily tie up their money for 50 years.
Fiona Walsh writes for the Guardian newspaper in London
