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Kate Swann unveils £2bn SSP float despite fatigue fears

Owner of Caffè Ritazza and Upper Crust is preparing to float for an estimated £2 billion, making it one of the biggest retail listings of the year

Former WH Smith boss Kate Swann defied fears of flotation fatigue as she announced a return to the stock market with her new business SSP.

The owner of Caffè Ritazza and Upper Crust is preparing to float for an estimated £2 billion, making it one of the biggest retail listings of the year.

In a swipe at several listings which have struggled on the stock market recently because of high expectations and even higher valuations, Swann said investors would be able to tell the difference between “strong businesses and weak ones”.

Swann — who joined SSP last year after steering WH Smith through the recession — told the Evening Standard: “The market is quite volatile but for fundamentally strong businesses such as ours we think now is the right time.

“This will be seen as a sensible investment by investors who can tell the difference between strong businesses and weak ones.”

SSP’s debut also means Swann, who will be able to cash in from the float, becomes chief executive of a FTSE company for the first time since leaving WH Smith last year.

She said: “I ran a listed company for 10 years, so I’m looking forward to returning. It feels a bit like coming home.”

She defended SSP’s owners EQT from selling the company and hoping to raise £500 million to pay off its debts while not reinvesting any funds into the business. Debt levels at present are at £870 million.

“Private equity are not cashing out here at all. In terms of the levels of investment, it’s been substantial. They have had the company for eight years, which is long for private equity.

“Clearly we are generating lots of returns, so I don’t think accusations such as those can be levelled at us.

“We don’t need to raise money to re-invest in the business. We’ll invest £80 million capex this year, so we don’t need to raise extra capital.”

EQT, a Swedish private equity firm, bought SSP from Compass Group for about £1.2 billion, after the catering firm spun it out in 2006.

The company hopes to cash in on the growing travel market through its airport and railway station businesses, focusing especially on the US, Middle East and China, where SSP has contracts in six airports. A plethora of businesses have listed on the stock market in recent months but seen their share price plummet.

Pets at Home, AO World, Card Factory and MySale are all trading below the price at which they floated. SSP, which also runs franchises in railway stations for Marks & Spencer, Burger King and Starbucks, revealed last week that underlying pre-tax profits jumped 12.6 per cent to £54 million for the six months to the end of March on sales of £865.8 million.