Best People snubs London with $250m Nasdaq float

A FAST-GROWING British recruitment company is preparing to snub London investors with a $250m (pounds 150m) flotation on Nasdaq, the US exchange for fast-growing companies, early next year.

Best People, which was set up only 18 months ago and already has annual revenues of almost pounds 100m, is pressing ahead with plans for a flotation despite a dramatic downturn in the share prices of quoted recruitment firms as investors worry about prospects for the global staffing industry.

The company, which provides contractors specialising in information technology skills, is keen to build up its business in the US through acquisitions.

Rupert Bayfield, Best People's chairman, said: "We are still planning a Nasdaq flotation, but we haven't filed yet. The plan is to get the prospectus drafted and wait for calmer weather."

The flotation is likely to make paper millionaires of Mr Bayfield and his co-directors, who include Susan Cuff, the chief executive, John O'Sullivan and Jon Butterfield. Between them, the directors control a quarter of the company's equity.

The remainder of the equity is in the hands of Apax, which has a 43 per cent stake, the owners of businesses which have been bought by Best People, and other employees of the company.

Mr Bayfield is well known in the staffing industry sector, having floated the IT staffing firm Computer People - now named Delphi - on the London Stock Exchange in 1987. He left the company in 1991.

Mr Bayfield is critical of UK investors' perception of the recruitment sector. "Ten years ago we were the first IT staffing company on the UK stock market and the investors didn't have a clue," he said. "But I met some fund managers recently and it was clear they still didn't understand the industry."

Shares in recruitment firms have crashed recently amid worries that a downturn in the investment banking sector would hurt recruitment firms' prospects. Companies such as Parity, MSB and Select Appointments have all seen their share prices drop.

Recruitment company shares in the US have also fallen, although less sharply. "In the US there are several multi-billion-dollar businesses in this industry," Mr Bayfield said.

He added that plans for a flotation had not been shelved because of the share price falls, although Best People would wait for the markets to calm down before attempting to go public.

The company has appointed Donaldson Lufkin & Jenrette, the US investment bank, to advise it on the float.

Best People has grown extremely rapidly in the booming IT recruitment market, with the help of several acquisitions. The company was founded in April 1997 with pounds 5m, of which pounds 3.5m came from Apax, the venture capital firm.

This year the company is expected to report its first profit on revenues of around pounds 90m. Next year analysts expect it to make a profit of around pounds 12m on revenues of over pounds 160m.

Mr Bayfield said the flotation would help Best People to raise a warchest which it could use to pursue acquisitions in the US.