RealTime IT News

Freeserve Shares Up 45 Percent on Debut

Shares in Freeserve traded at 45 percent above the launch price, quickly reaching 220p ($3.52), some minutes after trading started in London and on the Nasdaq.

Around one-fifth of Freeserve was floated by its owner, electrical retailer Dixons, at a price of 150p ($2.40). Institutional investors took the bulk of the shares, which were oversubscribed 30 times.

Freeserve closed in London at 205-1/2 pence, a premium of 37 percent.

The launch of Freeserve sees the first major Internet stock to come to market in the UK, and will be regarded as a benchmark for future IPOs.

However, many stockbrokers and observers have been highly cynical about the high prices being paid for Freeserve shares, noting that the company -- which shows no signs of having a profitable business -- is being valued by the market on a par with established firms like stationers W.H. Smith.

In just a few months, Freeserve attracted over a million users of its free Internet service -- but has also lost hundreds of thousands of users in a very high "churn rate" following the launch of other free ISPs in the UK.