Wednesday, May 31, 2006

Know when to hold 'em, know when to fold 'em

God I hate this song, but I couldn't resist. I think a lot of us who care about these sorts of things have been looking at the impending Telio IPO and wondering what the potential damage from Vonage could be, if any.

I would argue that, despite some superficial similarities, the companies are quite different in approach and strategy. Nevertheless, companies tend to get lumped together by investors, especially if they sense that there is some sentiment-led risk involved. So, I was intrigued to see today the news that Telio is proceeding with its listing on the main Oslo Bourse (heretofore it has been an OTC share), but withdrawing the sale of new shares.

The bookbuilding process apparently could only achieve an oversubscribed offering at NOK30 per share, which was below the indicative price range set by the company of NOK31 - 37. Rather than lowering the range, taking the money and running to their new yachts, the company and founders seem to be signalling that they are in for longer term value creation - which I guess investors and potential investors should regard as a pretty significant statement. It's nice to see a company with the conviction to walk away from a difficult situation, and may do something to dispel some of the bad karma and cynicism radiating from across the pond.

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