12th Jun 2014 08:32
LONDON (Alliance News) - The initial public offering of B&M European Value Retail SA, the discount retailer chaired by former Tesco PLC Chief Executive Terry Leahy, was well received Thursday, as it became the biggest London IPO of the year so far.
The company priced its IPO on the London main market at 270 pence a share, giving it an initial market capitalisation of GBP2.7 billion. However, it was trading at 283.50 pence in early conditional dealings.
The London IPO market got off to a strong start in 2014 after several years of low activity in the wake of the financial crisis. However, there were signs in April and May that investors were becoming more cautious about certain IPOs after some listings were either pulled, or performed badly in the aftermath of the start of trade.
B&M's strong performance suggests that demand is still there for new issues, although unconditional dealings in the shares won't start until June 17.
The company is owned by private equity firm Clayton, Dubilier & Rice and the Arora family, who will receive about GBP1.0 million in gross proceeds in the offer, and more if the over-allotment option is exercised in full. The company will get GBP75 million.
The IPO is expected to raise total gross proceeds of about GBP1.08 billion, or GBP1.19 billion if the over-allotment is exercised. Bank of America Merrill Lynch is acting as stabilisation manager for the offering.
Simon and Bobby Arora will retain the majority of their shareholding in B&M following the IPO and will continue to lead the business.
"We believe that becoming a public company gives us the right long-term ownership model, allowing us to build on our strong track record as we move to the next stage of development," Chief Executive Simon Arora said in a statement.
For the year ended March 31, B&M reported revenue of GBP1.27 billion, up from GBP998 million a year earlier.
Prior to B&M's listing, the biggest IPO in London in 2014 had been Saga, the insurance provider and travel agent that targets the over 50's, which listed in May with an initial market capitalisation of GBP2.1 billion.
B&M was joined Thursday by online retailer Mysale Group PLC, part owned by the wife of UK retailer Philip Green, in pricing its IPO. MySale is listing on London's AIM market.
Its placing price was set at 226 pence per share, which will give it an initial market capitalisation of about GBP340 million when it starts trading on June 16.
Mysale was launched in Australia in 2007 and has since expanded to New Zealand, southeast Asia, the US and UK. It is a so-called flash sales retailer - once a customer becomes an "exclusive" member, they get access to member-only fashion sales.
It had about 795,000 active members across eleven online sites on May 14, although it had 10.8 million registered members and is adding about 250,000 new members each month.
Last month, a vehicle owned by Christina Green, the wife of Philip Green, agreed to buy a 25% stake in Mysale for AUD87.5 million. The Greens own the Arcadia retailing group, which includes brands like TopShop, Dorothy Perkins, Wallis and BHS.
The IPO will raise MySale GBP40 million, which it will use for marketing in its new markets in the US and UK, to make potential acquisitions, automate its existing warehouses, and for working capital.
Mysale made revenue of AUD183.6 million in the year to June 30, 2013, up 64% on the year, while adjusted earnings before interest, tax, depreciation and amortisation was AUD8.9 million, up from AUD3.7 million a year earlier.
Macquarie Capital (Europe) Ltd is acting as nominated adviser, joint broker and joint bookrunner on the offer, while Zeus Capital Ltd is acting as joint broker and joint bookrunner.
Two more companies also added themselves to the London IPO pipeline on Thursday.
IMImobile Ltd, a London-based technology company which provides mobile communication software and services for businesses, said it wants to raise up to GBP30 million in gross proceeds in an IPO on AIM. It will use the money to drive internal growth and look at potential acquisitions.
SPARK Advisory Partners Ltd is acting as nominated adviser on the IPO, while WH Ireland Ltd and Whitman Howard Ltd are joint brokers to the company.
IMImobile, which employs 650 people around the world, posted revenue of GBP38.5 million in the year to end-March, 2013, and earnings before interest, tax, depreciation and amortisation of GBP6.1 million excluding impairments, acquisition and disposal costs, restructuring costs and share-based compensation.
It has clients in over 60 countries, including a "large number" of mobile operators and blue-chip companies, "typically on multi-year contracts providing a a high level of earnings visibility, with significant recurring or repeat revenues," it said in a statement.
Shelf Drilling Ltd, a shallow water offshore drilling contractor to the oil and gas industry, said it intends to list on London's main market, and expects to raise gross proceeds of USD250 million in a total offering of at least USD500 million.
It reported adjusted revenue of USD1.2 billion and adjusted Ebitda of USD468 million in 2013, while its contract backlog stood at USD3.4 billion on May 27 of this year.
It didn't give any details about when it expects to list, or the possible size, but said it intends to adopt a dividend policy with a pay-out ratio of 40% to 60% of net income after its IPO.
"Shelf Drilling will bring to public equity investors the opportunity to invest in a strong, cash generative business with good forward visibility and growth potential. Since inception, the highly able Shelf Drilling executive team has delivered a tremendous result in building a strong presence among blue chip customers in several of the world's most prolific production basins," Chairman-elect, Richard Olver, said in a statement. Olver was previously chairman of BAE Systems PLC.
By Steve McGrath; [email protected]; @SteveMcGrath1
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