High-profile internet retailer Lastminute.com will leave most of its 250,000 prospective private investors disappointed when it floats tomorrow.
About 25 per cent of the company - some 33 million shares - are being floated on the London Stock Exchange. The flotation will raise money to develop the one-and-a-half-year-old business and will make its youthful founders, Brent Hoberman and Martha Lane Fox, multi-millionaires.
But interest in the stock is so high that it is estimated that the 15 per cent to 20 per cent of shares expected to be allocated to private investors has already been over subscribed by about 25 times.
With pre-paid orders for shares amounting to an estimated £625m, almost everyone who tries to buy shares will be disappointed. Only about £25m worth of share orders are likely to be fulfilled.
Most private investors are expected to be allocated around 50 shares each, with a total value of about £200 (assuming £4 per share), although unofficial grey trading of the shares has seen them at £5.65 each.
The enormous over-subscription will leave Lastminute with £600m floating about in its accounts for about a week until it can issue cheques paying private investors the difference of what they ordered and what they were allocated.
According to some estimates the interest on this amount could earn the company about £2m - a sum which dwarfs the loss-making firm's £409,000 turnover for the fourth quarter of last year.
"Lastminute is the highest profile example of the sort of investor madness going on at the moment," said Anthony Miller, a UK market analyst at Richard Holway. "When you look at Lastminute as a business or as a future proposition it is hard to justify the valuation being put on it by the market."
Miller warned that it was only a matter of time before the price inflation of the so-called dot com sector righted itself. "Then we'll see a lot of private investors badly burned, and that will be the next example of negative equity. And it will also have a political fall out," he said.
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