UK retailers prepare for IPO gold rush

IPO WATCH: Retailers are poised to raise more from IPOs in the first quarter of 2014 than in the past five years combined.

by Elizabeth Anderson
Last Updated: 24 Feb 2014

As the economy strengthens, investors’ appetite is returning and British retailers are set to raise a record amount in Initial Public Offerings according to new estimates.

Poundland, Pets At Home and online appliances firm AO.com have all announced IPO plans this month. They are expected to raise at least £841m from selling shares, according to data from accountants EY and research firm Dealogic acquired by Bloomberg. That compares to £266m raised by British retailers in the last five years combined, Bloomberg suggests.

Pets at Home, which has 369 stores across the UK, said yesterday that it hopes to raise £275m by floating ‘at least’ 25% of the business  to pay down debt, and to give its private equity owner, KKR, the chance to exit.

The announcement came a day after Poundland confirmed it will float on the London Stock Exchange in March. The chain, which sells everything for £1, has 530 outlets in the UK and Ireland and the business is expected to be valued at around £700m.

Estimates by Dealogic suggest another seven UK IPOs could be on the cards this year, which could make 2014 the best in IPO volumes before the financial crisis. DFS Furniture and discount store B&M Retail are among other British retailers considering going public.

Britain’s IPO rush has been buoyed by the listing of Royal Mail in October, whose shares have soared since its debut. They are currently trading at 618p – almost double their 330p listing price.

Investors are also feeling more confident as the British economy picks up. The UK’s inflation rate fell to 1.9% in January, the first time in more than four years that it has gone below the Bank of England's 2% target; business optimism is at its highest for 22 years, a survey by BDO recently found; and the economy is expected to grow by 2.5% this year according to forecasts.

Candy Crush maker King also confirmed plans to float on Tuesday. One of the most hotly awaited IPOs, the London-based firm is expected to raise up to $5bn when it floats on the New York Stock Exchange this year.

Check out the 11 largest VC rounds of 2013

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today