C&C flotation looks likely to proceed this time around

Cantrell & Cochrane's flotation in Dublin and London may be back in the pipeline after the appointment of major financial advisers but an initial public offering (IPO) of this scale is going to need near-perfect market conditions if it is to be a success.

Putting a value on C&C is difficult as the most recent results for the group are six months old. But apart altogether from the shares that private equity group BC Capital will undoubtedly want to sell, it can be taken as read that C&C is also going to want to issue a lot of new equity to reduce the heavy debt load that has existed since the heavily leveraged €734 million buyout in 1999.

That means an awful lot of C&C paper is going to be coming on the market so the company and its assembled advisers will need to embark on an intensive roadshow to attract the overseas investment interest essential to the IPO's success.

Domestic institutions will undoubtedly buy into C&C but, given their progressive disengagement from Irish equities, the IPO will require substantial interest from overseas.

That said, C&C and BC Capital are unlikely to have gone public with the appointment of Goldman Sachs and SSSB as global co-ordinators unless they were confident that the suggested July timescale for the IPO could be achieved. C&C has already pulled the IPO when markets went sour, so the group will be very reluctant to pull the flotation a second time.

There is a general feeling that a stock like C&C, with its strong cash flow, household-name brands and exposure to a once-again strengthening Irish economy is in a good position to capitalise on the appetite for defensive stocks. The next three months will be crucial, and C&C and its partners will be fervently hoping that a rise in oil prices and the instability in the Middle East will not destabilise equity markets.

If C&C does go ahead with the IPO, it will not be the only major flotation in Europe in the next few months. Also pencilled in for a float is Yell, the former BT telephone directories business; Great Universal's luxury goods offshoot, Burberry; and, further down the line, is British bookmaker William Hill.

Some market sources believe that the private equity groups that backed the buyouts of groups like C&C and William Hill want to move quickly to avoid getting stuck in any IPO logjam that may develop. That's another reason for C&C and BC Capital to proceed full-speed ahead with the IPO.