Car parts retailer Halfords set for £593m flotation

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The Independent Online

Halfords priced its shares at 260p last night, giving the car parts and bicycles retailer an initial market valuation of £593m.

Halfords priced its shares at 260p last night, giving the car parts and bicycles retailer an initial market valuation of £593m.

The valuation is at the lower end of the company's indicative price range of 250p to 300p, but the company is understood to be pleased to have got the issue away in a volatile market. The share placing was three-times subscribed.

The company confirmed plans to list on the stock market in May, raising about £280m by selling 45 per cent of its equity. But since then, investors' appetite for new issues has dried up, and at the end of last month the football shirt manufacturer Umbro had to slash its initial public offering price by one-third at the end of last month to secure its floatation.

One banker said then: "It is a buyers' market. If you want to come to the market in the current climate you have got to accept lower funds raised, or lower valuations."

Umbro's shares are due to start unconditional trading today on the London Stock Exchange at 100p, compared with initial estimates of 150p to 170p.

The proceeds from Halfords' flotation will be used to repay some of the company's £190m debt. The total value of Halfords, including debt, of £783m, means CVC Partners, the venture capital group that bought Halfords from Boots in 2002 for £427m, has seen the value of the company almost double in two years.

CVC Partners' stake in Halfords will fall from 90 per cent to 45.6 per cent in the float. It plans to sell the rest of its stake when market conditions improve.

About 50 top managers and staff at Halfords are expected to share equity worth about £45m. The chief executive, David Hamid, is understood to have "less than 2 per cent" in the group, which is worth almost £12m.

Earlier this year, Halfords reported a 10 per cent rise in sales to £579m for the 12 months to 2 April. Profits before tax rose to £28m from £12m. The accounts also revealed that Rob Templeman, the retail expert who CVC hired to help prepare Halfords for flotation, was paid £761,000 last year as part-time chairman.

Unconditional trading in Halfords shares is set to start next week.

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