Canal+ shares tumble on London debut

Shares of French broadcaster Canal+ tumbled nearly 16% during its London Stock Exchange debut on Monday, marking a rocky start for the largest new listing in the UK this year.

Canal+, a spin-off from communications giant Vivendi, opened at 290p but quickly fell to 243p, valuing the company at about £2.6bn.

Analysts and company advisors were optimistic, however, suggesting its valuation could rise to over €6bn as the market stabilised.

The spin-off was part of a broader restructuring of Vivendi, the Paris-based conglomerate controlled by the Bolloré family.

Shareholders overwhelmingly approved the move, with Vivendi’s leadership citing the potential to unlock value from its disparate divisions, which were seen as undervalued within the group.

Alongside Canal+, Vivendi was also spinning off advertising firm Havas in Amsterdam and publishing house Louis Hachette Group in Paris.

While the London listing was heralded by UK chancellor Rachel Reeves as a “vote of confidence” in the UK's capital markets, this year had still seen a net outflow of companies from the City’s main market, with nearly 90 delistings compared to just 18 new entries.

The government was actively reforming listing rules to revive the UK’s appeal as an investment hub.

Canal+ is best known for its subscription television services, live sports broadcasting, and Studiocanal, the production arm behind the popular Paddington film franchise.

The company had rapidly expanded its subscriber base beyond France, with two-thirds of its subscribers now located in Africa, Eastern Europe and Asia.

However, its valuation remained below that of UK rival ITV, despite Canal+ generating larger annual revenues.

Looking at the stock’s early volatility, some funds restricted to French-listed stocks were compelled to sell, while other investors reportedly exited for tax reasons.

Vivendi’s Paris-listed shares surged over 33% following the spin-off.

“Vivendi has entrusted the UK with its media production business Canal+, floating the Paddington producer on the London Stock Exchange with a label that might as well have said, ‘please look after this bear’,” said AJ Bell investment director Russ Mould.

“Canal+’s listing needs to be successful for both Vivendi and the reputation of the UK stock market.

“Vivendi needs to prove to investors that it was right to break up the business, based on the principle that its component parts could, in time, be worth more individually than together.”

Mould said that choosing London for Canal+ was important, as it is the biggest company to join the UK stock market since changes to the listing rules in the summer and under the newly-installed Labour government.

“If Canal+ does well, it could act as a shop window for other big names to float in London and help replenish the pot that has been shrunk by takeovers and delistings.

“Volatility was expected as certain investment funds which held Vivendi may be restricted to French-listed stocks and so they are forced sellers of Canal+.

“It’s common for demerged stocks to experience share price wobbles in the first few days as a standalone listed company as investors who inherited the stock decide if they want to stay or go.

“It can take a few weeks or months before the shareholder register shifts to individuals who want to hang around longer term.”

At 1053 GMT, shares in Groupe Canal Plus were down 15.48% at 245.1p.

Reporting by Josh White for Sharecast.com.