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.