Lukewarm response to HMV float

HMV's trademark image: Nipper the dog listening to His Master's Voice

LONDON, England (CNN) -- HMV, Britain's biggest music retailer, priced its shares at the low end of expectations after the UK's largest flotation this year met with a lukewarm reception from investors.

Shares were put at 192 pence each on Thursday, valuing the company at about £782 million ($1.1 billion), in line with the valuation of UK retailers Arcadia (AG-) and Woolworths (WLW).

The stock had been marketed at between 190 and 220 pence ahead of the full listing on May 15.

In conditional trading, which allows some shareholders the opportunity to buy and sell stock in an effort to build a market for shares, HMV stock started trading on Thursday at 190 pence, down 2 pence on its offer price.

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Its decision to price at the bottom of the range is a reflection of a lack of investor appetite for new stock offering as world markets struggle to climb. The slowdown stretches back more than a year.

The less than stellar stock market debut and performance of other retailers, like Europe's biggest mobile phone seller Carphone Warehouse (CPW), has also made many investors shy away from new offerings.

"Part of the problem is that we can't remember a time when a sizeable retail float like this was a success," Rupert Trotter, retail analyst at Royal Sun & Alliance Investments, which manages £36 billion of funds, told Reuters. "There's a feeling once bitten twice shy."

HMV's joint owners -- music giant EMI Group and U.S. venture capitalist group Advent -- are selling 402.6 million shares to raise about £351 million, most of which will be used to reduce debt.

EMI, which owns 43 percent of the company, will reduce its holding to 14.5 percent, while Advent will cut its stake in the company to 7.9 percent from 40 percent.

The company -- named after its trademark image of Nipper the dog listening to His Master's Voice on a gramophone -- operates 325 music and video outlets worldwide, as well as 197 Waterstone's bookstores in the UK and the Republic of Ireland.