23rd May 2014 09:18
LONDON (Alliance News) - easyHotel PLC, one of the portfolio of companies owned by billionaire entrepreneur Stelios Haji-Ioannou, Friday said it intends to list on London's AIM market, while insurance provider and travel agent Saga PLC priced its initial public offering at the very bottom of the range it had set, the latest suggestion that demand for new issues may be waning.
In a statement, easyHotel said it plans to raise up to GBP60 million in an IPO, money it will use to grow the business further in London and Europe and pursue franchise opportunities elsewhere.
"easyHotel is raising money to accelerate growth at a much faster rate than I could have grown it as a private company, whilst enabling me to spend more time on my diversified portfolio of other investments," Haji-Ioannou, or Sir Stelios as he is commonly known, said in a statement.
Stelios said he planned to retain a significant minority stake after the IPO.
The billionaire is the founder of low-cost airline easyJet PLC. He also still has a minority stake in that business, but no longer has any operational involvement and no longer sits on its board.
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 decision to list comes amid growing signs that the recovery in the IPO market may have peaked.
The London IPO market has recovered strongly in 2013 and so far this year, after several years of depressed activity in the wake of the financial crisis. The recovery in the market for new issues came as stock markets around the world also recovered, with some indexes pushing to new all-time highs this year.
However, equity markets wavered in early April, as technology and biotechnology stocks were sold off, first in the US, and then in Europe. That sell-off was prompted by fears those sectors had become overvalued in the wake of high profile IPOs in the US in recent months, notably those of Twitter and King Digital Entertainment PLC.
In London, high-profile names such as Just Eat PLC, Pets at Home Group PLC and Poundland Group PLC have already floated this year and were well received as retailers, in particular, led the rush to list.
However, in recent weeks, retailers including Card Factory PLC and Pets At Home have seen their share price dip below the level at which they were offered, while energy technology company PassivSystems was joined Thursday by retailer Fat Face in postponing a proposed IPO. Both companies cited weak equity market conditions.
On Friday, Saga set the price for its IPO on the main market in London at 185 pence, right at the bottom of the 185p to 245p range it had previously set. That gave it an initial market capitalisation of GBP2.1 billion, which still makes it the biggest IPO of the year so far in London.
The company, which tailors its products for the over-50s and also offers cruises and holidays, savings and share dealing, and even a magazine, raised about GBP550.0 million, money it will use to reduce its net debt to about GBP700.0 million.
The decision to price its IPO low proved correct, as its shares rose slightly in early conditional dealings. The stock was trading at 186.122 pence Friday morning. Unconditional dealings will start May 29.
Saga is owned by a consortium of private equity companies, including Charterhouse Capital Partners, CVC Capital Partners, Permira, we well as numerous employees and other institutional investors. The owners have reduced their stake to 72%.
Saga allocated half of the offer to retail investors, including a "substantial majority" to its customers. It said customers got between 540 and 5,000 shares, with those applying for the minimum amount of GBP1,000 getting their full allocation. Over two-thirds of its customers got at least half the amount they applied for, it said.
"We have been very pleased with the level of demand for Saga shares from both retail and institutional investors, with the offer subscribed several times over," Chairman Andrew Goodsell said in a statement. "We are delighted to have so many of our customers as shareholders and to have a high quality group of core institutions who we believe will be long-term supporters of the business."
Citigroup, Bank of America Merrill Lynch, Credit Suisse, and Goldman Sachs led the IPO. JP Morgan Cazenove and UBS joined them as joint bookrunners, while Investec Bank was joint lead manager, and Mizuho International was co-lead manager.
Show retailer Shoe Zone PLC also got off to a good start as its shares started trading on AIM. It had priced its IPO at 160 pence a share, giving it an initial market capitalisation of about GBP80 million, but was trading at 169.6 pence Friday morning.
Shoe Zone had also scaled back its previous expectations. When Shoe Zone first said that it planned to float, a spokesperson said the IPO would value the company at between GBP90 million and GBP100 million.
By Steve McGrath; [email protected]; @SteveMcGrath1
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