Letsbuyit.com's postponed IPO could 'scare off investors'

Despite cutting its flotation price and extending the share subscription period, Letsbuyit.com's twice-cancelled IPO could be delayed until autumn, according to industry analysts.

The company was to float on the Frankfurt market yesterday, but a last minute decision saw it postpone the move until next week in order to satisfy Frankfurt market regulations.

Companies intending to float on the Frankfurt Börse which will raise less than E100m (£62.5m) must prove that at least 20 per cent of their equity will be taken up by private investors.

Letsbuyit.com has so far failed to do so, despite slashing its intended share price from a range of E6 to E7 (£3.75 to £4.35) to E4 (£2.50).

That means the company only stands to raise E55m to E75m (£35m to £47m).

However, industry experts say that while the postponed IPO was a shrewd move in light of the current climate, a successful IPO by next week looks doubtful.

Julie Meyer, co-founder and marketing director of First Tuesday, told silicon.com that while Letsbuyit.com was in a strong market position with good management, it could be waiting until Autumn for conditions to pick up.

She said: "We are through the period of hypergrowth now into a period of sustainable growth. Things will start picking up, but I don't think a week will make much of a difference."

However, she did say that postponing the IPO could be beneficial to the company in the long term: "What can be perceived as a failed IPO can be damaging to a company, but if people think Letsbuyit.com are cautiously riding out market conditions, it shows good judgement."

Mikael Arnbjerg, research analyst at IDC, was more doubtful about the implications of the postponed IPO.

"What they are doing now might scare off investors, it looks like panic. It's a necessity to get it done, but it sends out a negative signal," he said.

"I think they are obviously eager to have it next week," Arnbjerg added, "But I would say if they float it would have to be under radically different conditions than the original offer. The chances of them doing it next week are low."

Letsbuyit.com was unavailable for comment.