The hype that has been growing around the Google flotation for weeks was far from the minds of Dublin's larger institutional investors yesterday, with Irish fund managers displaying little, if any, appetite for the internet stock.
Reasons for avoiding the initial public offering (IPO) depended on the institution, but none was prepared to be swayed by Google's decision to cut its offer price range.
Even at between $85 and $95 per share (as opposed to an earlier range of $108 to $135), the stock is expensive, said one fund manager who had considered taking part in the flotation auction.
The problem, he said, is one of risk, with the prospect of Google managing to repeat its growth rate to date over coming years looking, in his view, very uncertain.
"There's huge growth in the internet but that doesn't justify paying that price," the fund manager remarked, adding that he was not averse to internet-based investments in general.
Another fund manager was more negative, pointing to Google's corporate governance practices as his reason for steering clear. The problem, he said, lies with voting rights, which Google has decided to allocate on a "dual-class" basis.
This means that stock mostly held by Google's founders and employees will have greater voting rights than the stock being sold in the flotation.
This does not offer the "transparency" that an institutional investor requires, the fund manager suggested.
He acknowledged that he had also been discouraged a little by Google's decision to sell its shares by auction rather than through the normal broker-led IPO system.
The auction structure, which is designed to give smaller investors an equal chance to take part, offers less "control" than he would have liked, he said.
Another agreed that the auction format was not the most appealing for institutions, suggesting that it was being driven by ideology rather than a real understanding of the market.
Google's Dublin-based employees, have been offered stock options as part of their pay.
Google said in March last year that it would create more than 200 jobs at its European hub in Dublin over the next three years. A spokesman was unable to say yesterday how many employees had been recruited to date.
