New Star Institutional Managers' shares rose to about 275 pence today, the first day of trading on the Alternative Investments Market of the London Stock Exchange. The price was about 20% more than the 225 pence offer price for the money management firm in the highly publicized IPO, which is valued at more than £704 million ($1.2 billion). The management firm had about £15.2 billion ($26.4 billion) in assets under management as of Sept. 30, New Star spokesman Michael Sandler said. AUM is up 42% over Dec. 31, 2004, and profits are estimated at "no less than £43 million" ($75 million) by Dec. 31, he said.
New Star was founded in 2000 by John Duffield, who holds 17% of the company and has not sold any shares. He also founded Jupiter Asset Management, which was later sold to Commerzbank. New Star will not raise additional money, and the IPO will allow institutions that backed the company - including HSBC, Fidelity Investments and the €50 billion ($59 billion) Royal Dutch/Shell Group pension fund - to sell their stakes. The amount sold as part of the offer is slightly less than 15% of the company, Mr. Sandler said. Institutional investors own 40% of the company, while employees, including Mr. Duffield, hold the rest. Under terms of their contracts, employees are not allowed to sell more than 25% of their shares immediately after the IPO, Mr. Sandler said.