In August 1998, retail giant Dixons launched Freeserve, one of the first free internet service providers (ISPs).

Less than a year later, in April 1999, Dixons decided to float Freeserve, and Linklaters & Alliance was selected to advise the issuer. At this point there had been concerns that the strong start to the year for technology stocks would not continue, but the announcement served to bolster the market.

There was one major problem: Dixons wanted the company to float on the main list, but the fledgling ISP did not comply with stock market rules and regulations.

Lengthy discussions between the London Stock Exchange and Dixons' advisers were therefore put in motion, which eventually led to the prospectus containing 11 pages of financial warnings – more than any other prospectus in the history of the UK stock market. The company eventually floated on the main list (and Nasdaq) in August, with a market capitalisation of £1.51bn.

What was unique about the deal was that it came before Chapter 25 and techMARK. Linklaters corporate finance partner Casper Lawson believes that the IPO was instrumental in pushing forward the introduction of both. On the back of the deal, Linklaters was approached to work on new economy flotations by banks and issuers alike.

The problem now facing Freeserve is that it no longer provides a service that users cannot get elsewhere. Today its share price is only marginally higher than its issue price after reaching a peak in early 2000, and it is now facing demotion from the FTSE 100. Put simply, its niche is becoming increasingly crowded.


Issuer: Freeserve. Advised by Linklaters & Alliance (UK), Shearman & Sterling (Nasdaq)

Investment banks: Credit Suisse First Boston, Cazenove & Co, Dresdner KB, Merrill Lynch, Warburg Dillon Read, Societie Generale. Advised by Herbert Smith (UK) and Brobeck Hale and Dorr (US)

Online retailer and travel agency listed in March 2000 on techMARK and Nasdaq in a glare of publicity.

The float was hugely oversubscribed and demand was such that the pre-float price was increased by more than 60 per cent just days before the issue. This led to an unofficial valuation of £888m. Some financial experts were quoting as high as the £1bn mark, putting it at the same level as well-established old-economy travel agency Thomsons.

But trading did not live up to the pre-float hype. On the first day of trading, shares rose to 555p, valuing the company at £732m. Two days later it was worth £590m as the shares dropped back towards the issue price of 380p. Directors Martha Lane Fox and Brent Hoberman, who had stood to gain £42m and £63m respectively, saw their stakes drop by £10.5m and £15.2m.

While shares in the company are currently worth less than a third of the issue price, is far from dead. Using its newfound capital to purchase its French online equivalent, Degriftour, for £59m in August, it has now acquired a major European presence. (Float adviser Linklaters was used again on this deal, seemingly displacing original adviser Bird & Bird once more.) And prior to the float, formed a joint venture with Australian online holiday retailer, to attack the Antipodean markets.

While its market capitalisation is less than it originally aimed for, it is currently a respectable £230.76m. Not bad for a company that recorded a turnover of just £409,000 in the last quarter of 1999.

Another interesting element of the deal is the way Linklaters and Freshfields were used. The former acted on both the London Stock Exchange and Nasdaq listings, whereas Morgan Stanley preferred to use Freshfields in the UK and Davis Polk & Wardwell for the US side. Global one-stop shop or not, good old horses for courses still seems to be the order of the day.


Issuer: Advised by Linklaters & Alliance (US & UK law)

Investment banks: Morgan Stanley. Advised by Freshfields Bruckhaus Deringer (UK) and Davis Polk & Wardwell (US)


TeleCity provides engineering services to internet and telecoms companies, and was originally scheduled for a May 2000 float on the London Stock Exchange's main list.

But as the company moved towards flotation, Nasdaq started to report losses. This in turn worried the UK markets, which were aware that the dotcom bubble was near to bursting. Then, on 17 May, online retailer collapsed and the market suffered a major downturn. With little hope of an immediate recovery, the TeleCity IPO was postponed.

But the company was still determined to float. Towards the end of the month, finance director Martin Ellis called a series of meetings over two days with the investment banks and legal advisers in a bid to get the deal back on its feet.

TeleCity was forced to cut its estimated market value of £700m by £130m when it finally floated in June. It also opted for a safer techMARK listing. At the start of trading, the float price rose from 775p to a peak of 865p, before dropping back to 820p.

Although the flotation raised only 75 per cent of the original amount hoped for, it still made £116m for the company and provided a healthy return for investors. 3i, which invested nearly £2m, saw the value of its stake eventually jump to around £170m.


Issuer: TeleCity. Advised by Eversheds' Leeds office and Linklaters & Alliance

Investment banks: Dresdner KB, Cazenove & Co, Goldman Sachs International. Advised by Linklaters