Card Factory's 766.6m pound IPO: are bankers ditching the champagne floats?

IPO WATCH: The retailer was valued at 9.5 times EBITDA - that was erring on the sober, but shares still fell 6%.

by Rachel Savage
Last Updated: 15 May 2014

A day after Luke Johnson’s Patisserie Valerie announced it was pricing its IPO at the bottom of its range, Card Factory launched another relatively sensible float.

The retailer, which has more than 700 stores, priced its shares at 225p, valuing the company at £766.6m, which is around 9.5 times the company’s earnings before interest, tax, depreciation and amortisation last year. That is decidedly more realistic than the ridiculously high multiples companies such as AO World and Just Eat listed at - just as well, as those are trading well below their offer prices. (Although it's worth pointing out that the majority of ludicrously-priced floats have been tech stocks. One rule for them, another for everyone else?)

The float of 38.7% of shares raised around £90m for the company, which it is going to use to pay down debt and expand to 1,200 stores in the next decade. It also netted around £200m for owners, including management and private equity group Charterhouse, which is hanging onto a 41.3% stake in the company.

However, even less frothy pricing didn’t stop Card Factory’s shares (with the does-what-it-says-on-the-tin ticker CARD) sliding 6% to 212p in conditional trading this morning, before full trading starts on Tuesday. As retail analyst Nick Bubb told the FT, ‘It is clearly a low-growth, mature business which generates loads of cash, so its appeal was limited to income investors.’

MT will hold back on the congratulations card for now...

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