25th Jun 2014 10:29
LONDON (Alliance News) - easyHotel PLC, one of the portfolio of companies owned by billionaire entrepreneur Stelios Haji-Ioannou, Wednesday set its initial public offering price at 80 pence a share, meaning it will have a market capitalisation of GBP50 million when it starts trading on AIM on Monday, lower than its previous estimates.
easyHotel's pricing came as Fundsmith Emerging Equities Trust PLC's shares rose in early dealings after its IPO on the main market in London, and private hospitals company Spire Healthcare Group PLC said it intends to list on the main market, raising new funds for the business as well as allowing its private equity owner to realise some of its investment.
easyHotel said it would raise new equity of GBP30.0 million in its listing, money it will use to expand its chain of hotels. However, when it announced its intention to IPO last month, it had said it was looking to raise up to GBP60 million.
At that time, owner Haji-Ioannou, or Sir Stelios as he is commonly known, said he intended to keep a significant stake in the business, but the IPO would allow easyHotel to grow faster than he could fund and allow him to put more attention into the rest of his portfolio.
New investors have subscribed for 27.7 million shares in the IPO, while Haji-Ioannou's easyGroup Holdings Ltd will invest GBP7.8 million by converting its GBP4.8 million shareholder loan into equity and subscribing for GBP3.1 million of the 37.5 million new shares being issued. That means easyGroup will own 55.7% of easyHotel after the IPO, and new shareholders will own 44.3%.
"The transparency and scrutiny of the public markets will also allow me to step back from the company and enable me to focus on continuing my diversification strategy into other business and philanthropic activities. I anticipate I will remain a significant and supportive shareholder for a very long time," Haji-Ioannou said in a statement.
EasyHotel is one of a number of other companies in Stelios' easyGroup. Others include easyCar, easyGym, easyProperty and easyPizza.
It currently has a portfolio of 20 hotels, made up of two freehold hotels that it owns, one long leasehold development site, and 17 franchised hotels. It operates in what it describes as the niche "super budget" hotel sector.
easyHotel is being advised by Investec Bank on its IPO. Its shares are expected to start trading on June 30.
The company's failure to raise as much as it had originally intended in the IPO is another sign that the market in London may have come off the boil in the last couple of months, after investors were spooked by some of the valuations being achieved in some IPOs earlier this year, and as the broader equity markets struggled to build on the gains of recent months.
However, some IPOs are still doing well. Shares of Fundsmith Emerging Equities Trust, founded by outgoing Tullett Prebon Chief Executive Terry Smith, were trading at 1,040 pence a share in early dealings Wednesday, having priced its IPO on the main market at 1,000 pence a share.
It raised GBP192.2 million in the IPO after issuing 19.3 million shares at that price. Its initial market capitalisation was GBP193.4 million, including 50,000 subscriber shares.
Smith is leaving Tullett Prebon once that company appoints a successor.
Spire, meanwhile, said it is looking to raise gross proceeds of about GBP315 million in its IPO, money it will use to reduce its debts and cover the listing costs.
"This primary raise, together with new debt facilities of GBP525 million - GBP100 million is still undrawn - and strong cash flow generation, will provide the company with a flexible capital structure and adequate financial headroom to drive the future growth of the business," it said in a statement.
Existing owner, private equity company Cinven Ltd, will sell part of its stake in the IPO, the company said.
Spire is the second-largest operator in the UK independent acute healthcare sector by revenue, with 39 private hospitals and 13 clinics across England, Wales and Scotland. The group was founded with the acquisition and rebranding of 25 Bupa hospitals in 2007 and has expanded since then.
In 2013, Spire made revenue of GBP764.5 million and earnings before interest, tax, depreciation, amortisation and rent cost of GBP209.0 million, representing a compound annual growth rate of 5.4% and 7.8%, respectively. Revenues in the first quarter of 2014 were up on the year, and Ebitdar rose 7.5% to GBP56.0 million.
"We have already invested GBP509 million in our hospital estate over the last seven years and have ambitions to grow and invest further. Bringing Spire to the public markets will enable us to access capital, if required, to realise our growth strategy, thereby providing more patients with access to our services," Chief Executive Rob Roger said in a statement.
Spire said it intends to adopt a progressive dividend policy based on a payout ratio of around 20%.
JP Morgan and Morgan Stanley are acting as joint sponsors for the Spire IPO, JP Morgan Cazenove, BofA Merrill Lynch, and Morgan Stanley are acting as joint global co-ordinators and joint bookrunners, and Numis Securities is acting as co-lead manager.
By Steve McGrath; [email protected]; @stevemcgrath1
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