Inside Business: Fast movers race ahead of the market

Independent 100 companies that went on to flotation have proved themselves on the big stage. Roger Trapp reports

COMPANIES identified by the Independent 100 as being among Britain's fastest-growing private businesses significantly outperform the FT-SE average after floating on the stock market, according to research by Price Waterhouse, the accountants.

The firm, which has compiled the annual listing in association with the Independent on Sunday for the past eight years, says the 24 Independent 100 companies that had floated by the end of March 1998 had together achieved an annual rate of return over six years of 29 per cent. In contrast, the FTSE All-Share Index produced an annual rate of return over the same period of 13 per cent.

Among the star performers are JD Wetherspoon, the pubs company, whose market capitalisation has risen by 1,350 per cent to pounds 667m since floating in October 1992; Stagecoach, the transport group, whose market value has gone up by more than 750 per cent to pounds 2.4bn since listing on the stock market in April 1993; and Independent Insurance, whose value has risen by over 650 per cent to pounds 783m in a similar period.

However, flotation has not been the only route to continued success. Five companies that featured in last year's Independent 100 were sold to UK trade buyers. These were Baxter & Platts, the Chesham-based contract caterer purchased last May by Granada for an undisclosed sum; Computer Film Holdings, a specialist in digital special effects that has worked on such films as Mission Impossible and was bought by Megalomedia for pounds 9m plus an additional contingent amount; Howell Henry Chaldecott Lury, the advertising agency best known for its blackcurrant Tango commercials, which was bought by Chime Communications for pounds 21m last July; Fraser Associates, which was bought by Action Computer Supplies for pounds 3m in the same month; and Woodgate Farms Dairy, a supplier of milk to supermarkets and other retailers, which was acquired in February for pounds 17m by Northern Foods.

In addition, eight companies were sold to overseas buyers. These included Largotim, a West Midlands software specialist that was bought last May by the US company BDM for $39m (pounds 23m), only to find itself part of TRW by the end of the year following its acquisition of BDM. Other information technology companies to find overseas owners were Bluepoint, a network integration group bought by Datatec of South Africa; McQueen International, a supplier of software support and translation services bought by Sykes Enterprises, an IT outsourcing specialist based in Florida; and IQD, which was purchased by C-Mac Industries, a specialist in high-tech video conferencing equipment.

Nigel Crockford, the PW partner responsible for the Independent 100 listing, says his research indicates that other companies are set to follow this successful trend. For example ARM Holdings, an IT company set up by Acorn Computers in 1990, came sixth in last year's Independent 100 and is seventh in the current listing. Last month it made a spectacular double entry on the London Stock Exchange and Nasdaq. The market capitalisation based on the launch price of 575p was put at about pounds 264m and the shares soared to 990p within the first five minutes of trading.

Last week, Computacenter, 47th in this year's listing and the UK's biggest privately owned IT group, announced details of its flotation. Shares will be priced at between 550p and 670p when they start trading on 21 May, giving the company a likely value of more than pounds 250m.

The sports retailer Sports Division, in 48th place, is understood to have postponed plans for a listing, but fashion chain New Look, 70th in the listing, is planning a second attempt at flotation next month. This is expected to value the company at more than pounds 300m.

Mr Crockford said the performance of Independent 100 companies after they joined the market was "clearly outstanding". He added: "They continue to aim for sustainable growth, which along with profitability is a key driver of shareholder value."