… the UK IPO market that is.
On Friday, two companies have announced offer prices for their flotations on Friday morning and one of them, shock horror, even has a private equity backer which is using the IPO to exit.
The are fashion retailer SuperGroup, best know for its Super Dry brand, and Promethean World, a maker of interactive whiteboards.
SuperGroup has priced IPO at 500p a share – for a market cap of £395m – while Promethean has priced at 200p — around the middle of the 180p-225p range, for a market value of £400m.
And shares in Promethean have already started trading (on a when issue basis).
So why have a fashion retailer and a maker of high-tech chalk boards been able to float when many other companies, particularly those backed by private equity, have failed?
In the case of Promethean investors appeared to have overlooked the fact that Apax is selling down its 25 per cent holding because of valuation (at the mid point the company is valued at 16 times prospective earnings), the prospect of 20 per cent growth over the next three years and the fact that 90 per cent of revenues come from overseas.
And it is also worth noting that Apax was never involved in the day-to-day running of Promethean and certainly not the decision to float. In fact it was never represented on the board. The float was 3.3 times oversubscribed.
As for SuperGroup, bankers say investors have been prepared to back the listing because of valuation (at 500p, SuperGroup is on prospective PE of just 13), it has no debt and there is no private equity involvement. And as with Promethean, there is the prospect of growth.
SuperGroup currently has 40 standalone stores, but chief executive Julian Dunkerton reckons there could be up to 14o before the brand would suffer from saturation. The company has only just started to invest in its internet offering and it also had an international wholesale business.
So, the message seems to be clear. Institutional investors are only going to back growth stories at a reasonable price with litte or no debt. Private equity please take note.
Related link:
Promethean and Supergroup set for £400m listings – FT