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Richard Branson brought his Virgin Group back to the UK stock market this week after a 16 year absence, but failed to set the market alight.
The IPO of the group's Virgin Mobile unit emerged on Tuesday at a mere pound(s)125m, at the bottom of a lowered price range of 200p-220p and with only 25% of the company floated.
Although the stock gained 3.5% on its first day of trading on Wednesday, it was hammered yesterday (Thursday), losing 4.23% to close at 192.5p against a broader market fall of less than 2%.
At 200p, Virgin Mobile was priced at a discount to its UK competitors Vodafone and mmO2. The valuation suggested that bookrunners JP Morgan and Morgan Stanley had been mistaken in their attempt to persuade investors that Virgin Mobile's status as a "virtual" mobile network was an advantage.
Virgin Mobile does not have its own network infrastructure, but leases capacity from Deutsche Telekom's subsidiary T-Mobile, which until recently was its 50-50 joint venture partner.
Bankers cited a report by Commerzbank on Thursday, which questioned the relationship between the two companies and valued Virgin Mobile at just 180p.
Until Monday the price range had been 235p-285p and 98m shares were expected to be sold. The deal was cut to just 62.5m shares or 25% of the company. There is a greenshoe of 6.25m shares or 2.5%.
All the shares sold were existing shares that had been held by Virgin Group.
At the...