Baker & McKenzie partner Chris Bown says he and car rental company Avis Europe have learnt the lessons of its disastrous flotation 11 years ago in time for its second flotation on Friday (4 April).
Bown advised Avis Europe on its £278m flotation on the London Stock Exchange by US parent Avis Inc in 1986. Now he believes he is the only lawyer to float the same client twice.
Back in 1986, said Bown, shares fever, largely driven by the privatisations of big public companies, was at its height. The flotation of Avis Europe by its US parent was by public offer with the underwriter Morgan Grenfell guessing at a suitable offer price.
In the event, the shares were undersubscribed and almost two thirds of them were left with Morgan Grenfell – and the price took a nose-dive.
In addition, said Bown, his office was inundated with phone calls from around 150 people, mainly distraught university students, many of whom had taken unauthorised overdrafts to buy shares in the hope that they could sell them on for a quick profit.
This time, said Bown, the flotation is following the US practice with a global book-built offering – asking for bids pre-flotation within a specified range, giving the underwriter greater certainty in fixing the listing price. Shares are also being offered in the US, continental Europe and the Far East, whereas in 1986 the offering was exclusively in London.
Avis traded on the exchange for three years after its first float before being bought for £900m and taken private by a consortium of companies led by Belgium’s D’Ieteren.
Bown remained adviser to Avis Europe throughout its private ownership just as Alun Cathcart remained its chief executive. Now the other two shareholders – Avis Inc and General Motors – are selling their stake in the flotation which will leave D’Iteren with around 60 per cent.