21.09.2012

Smith Electric Vehicles IPO shelved

Tanfield, the owner of Snorkel has announced that Smith Electric Vehicles in which it has a substantial investment has decided not to pursue its planned Initial Public Offering.

Bryan Hansel, Smith's chief executive said: "We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders. We have instead elected to pursue private financing opportunities to support the execution of our business plan."

The principal effect of this news has been to send Tanfield shares into a sharp dive and the currently 41 percent down. The company raised £2 million in July for a short term loan to SEV See Tanfield raises more funds

Vertikal Comment

Tanfield shares had been buoyed up by the prospect of a big pay-out from the Smiths flotation and so could be said to have been inflated to reflect that with that prospect currently shelved they are returning to a more normal level although at 30p they are possibly suffering from an overreaction at the moment, which is not unusual and are likely to bounce back.

Tanfield has raised around £14 million this year through new share placings at a price of around 41p. The company would have been looking to a pay-off from the flotation to help with continuing expansion, but was astute enough to raise funds in February specifically for its access business. The key thing now is what Smith decides to do next. In the meantime the shares might be worth a gamble?