Reuters Group has announced that it is pressing ahead with the flotation of its electronic brokering operation Instinet despite the turbulent state of the world's stock markets.
Although greeted as a brave decision, traders wiped nearly 10 percent off the value of Reuters's stock amid fears that Instinet's initial public offering would be hit by the general high-tech slowdown.
Reuters said it would be offering as many as 33.9 million shares, or 14.1 percent of the business, at US$11 to 14 per share on the Nasdaq. At the top end of the range, that would raise $475 million and value Instinet at slightly more than $3 billion. The group still expects the IPO to go ahead by the end of June.
Many investors had expected that Reuters would hold off the IPO, but it appears the group is unwilling to lose face in the markets again. The group officially shelved plans to float its Greenhouse technology investment fund at the start of the year after intense speculation that market conditions were too volatile.
The Reuters share price lost almost 10 percent of its value in London, leaving the stock at 777 pence, taking it close to its 52-week low of 726 pence. Traders fear that the group could become a hostage to the markets and sell Instinet too cheaply. Original valuations suggested the group could be worth almost $5 billion.
Instinet is the world's largest electronic agency securities broker and competes with companies such as Island and Archipelago. It is an electronic communications network, or ECN, meaning that it sits above national stock exchanges to connect traders to any market in which it is permitted to operate. It can carry out trades in 40 securities markets and has membership in 20 exchanges throughout North America, Europe and Asia.