Pets at Home joins IPO rush
Wednesday 19 February 2014
Pets at Home is hoping to cash in on the public’s love of animals by offering shares in the company to members of the public and employees, alongside institutional investors, as management confirmed plans for a £1.5bn flotation on the London Stock Exchange.
Around 500 staff, including Nick Wood, the chief executive, will share a windfall of around £120m, as they already own a 10 per cent stake in the company, with the remainder owned by the private equity firm KKR.
The business, founded 23 years ago in Cheshire by Anthony Preston, becomes the latest in a long line of private equity-owned businesses keen to sell up while investors are looking for companies into which to sink their money.
If the £1.5bn valuation for Pets at Home is realised it will make the company one of the biggest retail flotations this year, in a considerable mark-up on the £995m paid by KKR just three years earlier.
Mr Wood defended the company’s decision to list now, despite several retailers fighting over the same cash, suggesting that the business was unique as the UK’s largest pet business by a considerable margin. He said: “We are unique… In the private equity world I’m always asked: ‘When are you going to see some returns?’ So now, having considered our options for some time, it is the logical step for our shareholders.”
The former chief executive of American Golf, who owns two bichon frise dogs, added that following the flotation he wants to expand the business to 500 stores (from 369), with 700 veterinary surgeries and 300 grooming salons.
Management said the float will see a minimum of 25 per cent offered, raising £275m, which will be used to pay down debt. It will also use £325m from new banking facilities to cut debt, which will leave it with net borrowings of £275m.
The 6,000 staff in stores, who own 23,000 pets between them, are set to be given the chance to buy shares at the float price; Mr Wood said the general public will also be able to buy in, as he hopes to tap into the 1.6 million members on its mailing lists.
He said: “We believe it’s important to have as wide a shareholder base as possible. Our colleagues and customers love Pets at Home and have a common bond, an emotional bond, with our business.”
Yesterday’s announcement makes the company the fifth retailer to reveal plans to join the stock market this year, with another 10 in the pipeline. The newsagent McColl’s, white goods firm AO.com, discounter Poundland and Russian hypermarket group Lenta have all announced, while the online fashion firm boohoo.com, B&M Bargains, DFS, Card Factory, House of Fraser and Koovs are all thought to be eyeing a float.
Last night, Retail Week reported that AO.com has been heavily over-subscribed as it prepares its prospectus; however some in the City have suggested the mooted £1bn valuation is too high.
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