Airline's stock is being valued at the mid to upper part of the range issued by the company
A "grey market" in Aer Lingus shares has put a value on the airline's stock at the mid to upper part of the range issued by the company earlier this week.
In the Republic, spread better Delta Index said the shares were worth €2.83. This compared with the company's own valuation of between €2.10 and €2.70. In the UK, Cantor Index, another spread betting company, said Aer Lingus was trading at about €2.47. One of its rivals, IG Index, had the shares at about €2.53.
A spread bet is a gamble on the outcome of any event where the more accurate the gamble, the more is won and conversely the less accurate the more is lost.
A bet is made against a "spread" (or index), on whether the outcome will be above or below the spread. In the case of the Aer Lingus IPO, the spread betters are taking bets on what price Aer Lingus will float at.
David Bewick of Cantor Index said trade was relatively slow so far, with spread betters waiting to see what Dermot Mannion, chief executive, would tell the investment community.
"There is a feeling that this IPO will go all right, but investors will want to get it at the right price. There will need to be a bit of premium in it for people. A price of between €2.20 and €2.25 would probably be right, but no higher." Mr Bewick is responsible for new issues of stock for Cantor.
Paul Kenny, risk director at Delta Index, said spread betting should only be undertaken by those who knew what they doing. "Financial spread betting offers high leverage which, like buying property, means substantial gains if you call the market right but can mean significant losses if you get it wrong." Delta offered a stop loss facility that would limit any downside, he said.
The Irish Financial Services Regulatory Authority said yesterday it did not regulate spread betting.
However, a spokesman said it was due to come in under its jurisdiction following the transposition of the markets in financial instruments directive, which will not be fully operational until November 2007.
Meanwhile the Aer Lingus prospectus also reveals that Futura, the charter airline in which Aer Lingus has a 20 per cent stake, may be up for sale. Investment bankers have been asked to identify "value options for the shareholders", including the possible sale of the stake.
An information memorandum has been circulated to a number of parties inviting them to make an offer for Futura. Aer Lingus declined to say last night how much its stake may be worth.
Futura was once run by Willie Walsh, the former chief executive of Aer Lingus who now heads up British Airways.
It has also been disclosed that a report on pensions at Aer Lingus, by consultants Buck Heissmanm, has called into question the recent deal to shore up the Aer Lingus pension scheme, known as the Irish Airlines (General Employees) Superannuation Scheme.
The deal was a prerequisite for union support for the sale of the airline.
