Detica, an IT services firm, yesterday sparked hopes of a revival in technology businesses as it braved tough conditions by unveiling plans to float on the London Stock Exchange.
The Surrey-based firm, one of only a handful of technology companies that have trodden the IPO path over recent months, is hoping to float by the end of June. Following the collapse in value of technology firms two years ago, investors have shied away from backing private firms, forcing many to abandon their flotation plans.
Detica, which is hoping for a £90m-£100m valuation, will be the first medium-sized technology firm this year to test the flotation waters and, as such, is likely to be a key barometer. It is said to be looking to raise around £16m of new money.
"Obviously we've thought very hard about it. Our own trading performance feels good," its chief executive Tom Black said, adding: "Our advisers are fairly clear that they see the market being open and perceptive to a business with a good track record, a strong management team and operating in a growth segment of the market."
The company, which was founded in 1977 and which was formerly known as The Smith Group, provides a consultancy and implementation service for "customer relationship management" technology to customers including Centrica, BT Cellnet, Lloyds TSB, National Express and the Government.
The venture capital firm Candover, which owns 40 per cent of Detica, is expected to sell more than half of its shares in the IPO while Detica staff, who own the balance of the business, will be able to sell around 20 per cent of their shares. Around 80 per cent of the company's 282 staff are shareholders.
Mr Black, who has a 12 per cent stake, said yesterday he would "probably" sell some shares in the float but said he would keep "the vast majority".
The £16m Detica is thought to be raising is expected to go towards paying off its £1.4m of bank borrowings as well as redeeming its preference shares, leaving it with around £8m. In the year to 31 March 2001, Detica recorded a pre-tax profit of £4.7m on sales of £26.6m.
In the eleven months to 24 February, the company's sales totalled £29.2m.
Mr Black was unfazed by the general slowdown of spending on IT. "Getting new clients to trust new suppliers is hard. People are nervous," he said, but added business from customers who had used Detica before held up "quite strongly" over the past year.
Around 14 per cent of the company's revenues come from sales to telecoms companies, mainly mobile phone operators, and its top ten customers accounted for two thirds of sales last year.Reuse content