Alfa Financial Software's shares rise sharply in London debut

By Clara Denina and Dasha Afanasieva

LONDON (Reuters) - Shares in Alfa Financial (ALFAAL.L), which provides software for the asset finance industry, rose sharply on their London Stock Exchange debut on Friday, making the listing London's biggest this year by market capitalisation.

The shares opened trading at around 418 pence a share, up from the listing price of 325 pence, and had hit a high of 430 by 1352 GMT, valuing the company at nearly 1.3 billion pounds.

A source familiar with the matter had previously said the company, which counts Bank of America (BAC.N) and Daimler's (DAIGn.DE) Mercedes-Benz as customers and fund managers Old Mutual (OML.L) and Henderson Group (HGGH.L) as investors, was aiming for a valuation of at least 800 million pounds.

London-based Alfa, which made adjusted earnings before interest and tax of 32.8 million pounds in 2016, has said it hopes the listing will raise its profile and help it win market share by attracting new customers looking to replace legacy or in-house systems that have failed to keep up with evolving regulations.

Uncertainty around Britain's future outside the EU single market has dampened investor confidence in the London IPO market this year, with IPOs by companies based in Britain totalling $1.53 billion (£1.19 billion) in the first quarter, a drop of 28 percent on the same period last year, according to Thomson Reuters data.

A source close to the Alfa flotation conceded the first half would be "light" on London IPOs and Alfa had bucked the trend.

"The sector has huge barriers to entry at a time when companies are switching from legacy systems to modern technology," he said, adding that Alfa has the extra advantage of a bespoke system for leasing.

With the listing Alfa shareholder CHP Software and Consulting Limited, which is majority owned by Executive Chairman Andrew Page, will receive gross proceeds of around 254 million pounds excluding fees and expenses, and assuming no exercise of the over-allotment option, which allows underwriters to sell more shares than originally planned.

Barclays and Numis were joint bookrunners on the IPO, while Rothschild was financial adviser.

(Editing by Greg Mahlich)