Pets at Home confirms IPO as value goes through the woof

IPO WATCH: Along with the world and its wife (or the world and its dog), the pet retailer says it's planning to go public within the next few weeks.

by Emma Haslett
Last Updated: 21 Mar 2016

- Keep up to date with who’s listing where on MT’s new IPO Watch blog

Who’d have thought a few shelves of cat litter and a couple of tanks of giant African land snails would add up to a £1.5bn valuation? But if analysts’ expectations are right, that’s exactly what’s happened: Pets at Home, the pet retailer, has confirmed it is planning to go public, saying it hopes to raise £275m by floating ‘at least’ 25% of the business.

Investors will get their paws (/claws/talons) on a prospectus in the next couple of weeks: the company said it wants to use the money it raises to pay down debt, and to give its private equity owner, KKR, the chance to exit.

The plan is also to give its employees the chance to buy into the business, with bundles of shares worth £250, £500 or £750 made available to them. This is likely to be popular: when KKR bought the business four years ago, 500 employees opted to invest as well. Retail investors will be allowed to buy a minimum of £1,000 of shares.

The business has grown fast over the past few years: in 2012, it acquired equestrian equipment seller Ride-Away, and in April last year bought Vets4Pets, which does exactly what it says on the tin. It now operates 246 veterinary surgeries and 116 pet grooming salons, but ‘in the medium term’ wants to increase those figures to 700 and 300 respectively. It also wants to expand to more than 500 stores, from the 369 it has at the moment.

Analysts reckon this will be an important bellwether of investors’ appetites for private equity-owned retailers.

‘It has been through a couple of owners [including Bridgepoint] in recent years, so the question is how much has been left in the tank by KKR,’ suggested retail analyst Nick Bubb.

‘But it is highly profitable and cash generative, so it will be paying a decent dividend,’ he added. ‘And the market will have an obvious benchmark in the valuation of the leading US pet care retailer PetsMart, which has a $6.7bn market cap.’

Pets at Home’s announcement comes a day after Poundland, cleaning company ISS and Candy Crush developer King all announced plans to list (although, rather traitorously, King decided to do it in New York). Looks like this is only the beginning of IPO fever…

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