Separating the IPO winners from the overvalued losers

UK EQUITIES

The initial public offering of Just Eat made its début on the London Stock Exchange last week. It priced its share at the upper end of its range at 260p, which meant the company would be valued at 100 times its 2013 earnings. Investors liked the listing so much that prices rose 14.6p to 274.6p.

Just Eat is the latest in a spate of UK IPOs which are on course to make 2014 the biggest year for public offerings since before the credit crunch. Just Eat’s listing comes on the back of Pets at Home, Poundland, boohoo.com and AO World, to name a few. The uptick in companies looking to float is positive news for the UK, buoyed as they are by the improving UK recovery and demand from investors (many of the IPOs in 2014 have been oversubscribed). But while one of the biggest IPOs of 2013, Royal Mail, is currently being lambasted for having been sold too cheaply (Royal Mail shares are n...