New London listings continue to face problems. The processor of currency transactions, CAB Payments Holdings Ltd., has now become the worst-performing major IPO in the world this year.
The firm’s value, which was about $1 billion at the time of its listing in July, plunged after it said it had been affected by changes in conditions in “key currency corridors.”
Stocks fell to 53.1 pences, more than 80% lower than their IPO price of 335 pences. Before today, China’s Guangdong Lvtong New Energy Electric Vehicle Technology Co Ltd. experienced the steepest decline of any IPO raising $100 million or more, with a drop of over 50%.
CAB Payments has joined other London-based IPOs, including Aston Martin Lagonda Global Holdings Plc Deliveroo Plc MyProtein.com’s owner THG Plc that have seen their shares plummet after going public. This is the latest blow for a UK capital markets that has seen listings almost dry up in this year. The Cambridge-based chip maker Arm Holdings Plc chose to sell its shares in New York last month rather than London.
Neil Wilson, Chief Market Analyst at Markets.com said, “This is a classic example of an IPO gone wrong. Is this all London has to offer?” in reference CAB Payments.
Analysts Justin Bates and Portia Patel of Canaccord Genuity Group Inc. said that the company’s problems are due to central bank interventions in its markets. This includes mandates forcing firms in West Africa trade with local banks instead of intermediaries like CAB.
CAB has cut its revenue guidance for the full year by 17%, and stated that it will reduce costs to protect profits.
Liberum analyst Nick Anderson wrote, “In a few words, the management’s credibility is in tatters.” While we believe the business is strong and has a big market, management’s inability foreseeing events and guiding is a major issue.
CAB shares fell 74% to 56.60 pence at 1:24 pm. The company was valued at approximately £851million, making it the second largest new listing in London for 2023. The market cap of the company was reduced to £144 million by Tuesday’s crash.
Anderson, who recommends a buy, said that the stock is likely to be worthless until confidence has been rebuilt.
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