Yell on course for £2.3bn IPO bonanza

Directory service Yell looks on course for a record breaking IPO when it floats on the London Stock Exchange early next month.

Yell set the price of its stock this morning at between 270p and 345p, giving the firm a potential market value of £2.3bn.

However, the company had previously hinted that the float could give it a value of as much as £2.8bn.

Analysts are unfazed by the drop in value.

Henk Potts, equity analyst at Barclays Stock Brokers, said: "We've seen quite a lot of weakness in the IPO market lately, like HMV that had a shocker of a debut."

Some potential investors are concerned that the owners may be overvaluing the stock in order to make more money from the IPO, but Potts refuted the accusation.

"There has been an element of overvaluing in the market but these firms want to get this one out there, rather than make a quick buck at the investors' expense."

Yell was bought from BT Group last year by private equity firms Hicks Muse Tate & Furst and Apax Partners & Co for £2.1bn.

The investors are likely to sell £300m worth of shares.

It is hoped Yell's flotation will help reduce its debt mountain and pay for acquisitions that will build upon its US footprint.

Investors can order stock up to 3 July and the float is set to launch within days of that close.