Candy Crush float should not be bittersweet for LSE

Incredibly, Lombard - a grumpy, middle-aged white man in a suit - is sometimes accused of being out of touch with the zeitgeist. But this columnist is fully up to speed with Candy Crush, whose creator King Digital has filed to float on the New York Stock Exchange, in an implied snub to the London market.

The smartphone game is not just a way for passengers on public transport to kill time if they don't know what a book is. Candy Crush is also a highly addictive casual game of the Match-3 type operating via the fast-proliferating freemium model.

At least that's how a 24-year-old colleague describes it.

Really it's noughts and crosses, but on a phone. As with Angry Birds, a game played by David Cameron when he should be running the country, players pay for virtual items to "enhance" their playing experience. Or "cheat", in other words.

These sales produced tidy profits before tax of $568m for the London-based group in 2013, which plans to raise $500m. A capitalisation of $5bn has been mooted. Hopefully King has a higher target. Otherwise, grumpy middle-aged City scribblers won't have the fun of saying the initial public offering is over-priced.

That tendency may partly explain why King is not floating in London. Supposedly, valuations for tech companies are lower in the UK than the US. It is hard to tell when so few tech companies are listed here. We have WANdisco, but there is some debate whether this is a software group or the greatest creator of confusing acronyms in world history.

US investors are meanwhile more tolerant of companies that issue shares skewing voting in favour of founders.

Those crazy geek freaks at the London Stock Exchange have created a High Growth Segment intended to lure the denizens of the Silicon Roundabout district. Tumbleweed bowls through the HGS as through a spaghetti western.

But any rancour felt by LSE boss Xavier Rolet should be tempered by the reflection that the King float displays more red flags than Beijing on May Day. Casual games can fade from fashion fast and Candy Crush has a raft of rivals. Moreover, the owners have taken dividends of $504m in the past four months. This may be one float the LSE can do without.

Market stallholders divide into "lurkers" and "pitchers" according to a former boss of Poundland, one of the illustrious group of retailers that started as a market stall. The discount store chain has for many years been a lurker, with a float hinted at but never confirmed. On Tuesday, shrewd chief executive Jim McCarthy went into pitcher mode with a plan to list by the end of next month.

It goes beyond cliche to note that the question customers most frequently ask at the single-price retailer is: "How much does this cost?" However, the formula has been clear enough to fuel compound annual growth of 17 per cent in sales and 21 per cent in underlying profits.

Poundland's float is as eagerly anticipated as that of Saga or Pets at Home, a critter hypermarket that apocryphally halved stock attrition by relocating the rabbits five aisles away from the pythons.

Poundland's brand appeal, combined with its ownership by a private equity group, Warburg Pincus, means investors will be alert for overpricing. The ratio of trailing underlying earnings of £45.2m to the mooted capitalisation of £700m is 15:1. That compares with about 10:1 for US discounters Dollar General and Dollar Tree. Poundland, which hopes to double to 1,000 stores in the UK would argue it has more scope for growth.

Would-be investors, enthused by the success of an initial public offering from bargain booze purveyor Conviviality, should study recent capex for signs of attenuation. They will also want to know whether Mr McCarthy, a veteran retailer, will stick around. He made pots from the purchase of T&S Stores by Tesco in 2002 and from the sale of Poundland by Advent to Warburg Pincus for £200m in 2010. But this is a well-run company and a promising investment if the price is right.

There is something badly wrong with a UK energy supply system that creates incentives for big industrial customers to halt production at the drop of a hat. Manufacturers are attempting to game price setting that reflects peak demand sampling rather than a simple average.

This is partly because storing electricity is tough - one longs for a couple of outsize rechargeable batteries to be implanted into the power grid somewhere near Leeds. Distortions can only get worse as capacity drops to a perilously low level in 2017.

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation