The U.K. IPO market is in rude health, as Pets at Home and Poundland officially start trading, but analysts warn investors should be wary of "opportunistic" private equity firms offloading firms as market sentiment rides high.
The retailers are the latest firms to jump on the IPO (initial public offering) bandwagon, as London Stock Exchange (LSE) IPO volume has peaked at its highest level since 2007. Retail IPOs account for an impressive 69 percent of total LSE IPO volume, according to Dealogic.
(Read more: Boom in UK IPOs led by 'bricks and clicks')
Pets at Home, the pet accessories retailer and discount store Poundland are owned mostly by U.S. private equity groups. Kohlberg Kravis Roberts picked up Pets at Home four years ago for £995 million ($1.65 billion) and the IPO has valued the chain at £1.23 billion.
Warburg Pincus paid £200 million for Poundland in 2010 and the firm has since priced at the top of its initial range, valuing the group at £750 million.
U.K. fund manager George Godber said he doesn't do much with IPOs as it is often very difficult to work out why the private equity seller is selling.