The flotation of the Irish packaging group ILP on the London stock market has been a resounding success with the £6.75 million share placing oversubscribed over five times.

The shares rose strongly in the yesterday's first day's trading and closed up 10p to 85p from the offer price of 75p, valuing the company at around £18 million. The shares peaked at 90p in trading during the day.

Trading was exceptionally heavy with close on three million shares involved. While this turn over figures includes a certain amount of double counting, it still represents a substantial level of trading, given that ILP has no more than 21 million shares in issue.

Following the flotation, the directors of ILP will have 56 per cent of the equity with institutional investors holding the balance. A spokesman for London stockbrokers, Teather & Greenwood, said that the bulk of the nine million shares placed in the market were taken up by British institutions, although three Irish institutions were allocated shares.

The share placing involved two directors, managing director Mr Paul Burke and sales director Mr Paul McLaughlin, selling around £1.5 million worth of existing shares and a placing of new shares with institutions worth about £5 million.

The success of the ILP issue will undoubtedly tempt other profitable Irish companies to look directly to the London stock market for funding, rather than to an Irish stock market which has shown little inclination to support flotations by small and medium sized companies.

The decision of another small, Irish company, Stentor, to float on the Alternative Investment, Market in London, is another indication that small Irish companies see little future in an Irish listing, given the lack of interest shown by Irish institutions.

The Irish Stock Exchange, for its part, is placing a lot of emphasis on its proposed Developing Companies Market, which is due to start during the summer, assuming agreement can be reached with the Department of Finance on the tax treatment of investors who put money into new issues on the DCM.

The Irish Stock Exchange has proposed that investors in new issues on the DCM should receive BES type tax breaks on their investment.

Such a market, aimed at attracting tax based investment is unlikely, however, to prove attractive to companies like ILP whose primary aim in looking for a London listing was to attract institutional investors. Likewise, the decision to exclude start up companies means that companies like Stentor will also look to the AIM for funding.