Bakkavor this morning dramatically announced its aborted stock market listing was back on just a week on from pulling its initial flotation after lowering its valuation to get the deal away.

The ready meals giant pulled out of its planned London listing last Friday blaming “volatile” market conditions.

At the time Bakkavor said it had “sufficient institutional demand to cover the offering”, but it is understood the issue was under two-times covered, which led to concerns over how the shares would react post-listing.

Bakkavor was aiming for a valuation closer to £1.5bn and last week was marketing its shares at a floor of 195p as it was working on guidance of 195-235p per share.

However, after talks with more institutional investors this week Bakkavor agreed to cut the price of the issue to 180p per share, reducing its valuation to just over £1bn, to revive the deal.

This week’s edition of The Grocer quoted a number of City sources suggesting that valuation, rather than market volatility, was the reason Bakkavor pulled its initial float.

One source commented: “Bakkavor was pushing a valuation of 9x or 10x EBITDA of £145m and there was a loss in confidence in getting the levels they wanted.”

Baupost, Bakkavor’s major shareholder alongside the Gudmundsson brothers, was understood to remain keen on a float despite last week’s events, given the unlikelihood of a trade buyer emerging for Bakkavor meaning an IPO was the clearest way to recoup its investment.

Speaking before this morning’s volte-face, one source said predicted: “Bakkavor will come back to the market as it is the only way Baupost can hope to realise its investment. There is plenty of cash out there so should be enough demand for an IPO, but they may have to sweeten the deal and scale back valuation expectations.”

The float represents 25% of its share capital, with the Gudmundsson brothers retaining 50.2% of the group and Baupost retaining the balance.

The placement of 55m new shares raised net proceeds of £86m with a further £158m raised from shares sold by its current owners.

Shares are expected to start trading on 16 November.

Seven banks were on the IPO - HSBC, Morgan Stanley, Barclays, Citi, Peel Hunt, Rabobank and Rothschild – with Peel Hunt stepping up over the past week to join Barclays and Citi as joint bookrunners.

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