New IPO: Bakkavor IPO to target £100m in London

Upcoming IPO could value Tesco and M&S supplier at up to £1.5bn

New IPO: Bakkavor IPO to target £100m in London

Supermarket meal maker Bakkavor has unveiled plans to float on the London Stock Exchange in an initial public offering (IPO) which could value the company at up to £1.5 billion. The Bakkavor IPO will see the group’s Icelandic founders, brothers Agust and Lydur Gudmundsson, sell down some of their 59-percent stake in the company. US hedge fund Baupost, which owns the remaining 41 percent, will also sell shares in the float.

Bakkavor announces £100m London IPO

Bakkavor, which supplies Tesco (LON:TSCO), Marks & Spencer (LON:MKS) and Sainsbury’s (LON:SBRY), announced in a regulatory statement this morning that it was planning to raise £100 million in an upcoming IPO, to pay down debt and fund investment in the company. The Times meanwhile noted in its coverage of the news that the Bakkavor IPO could value the fresh meals maker at between £1 billion and £1.5 billion.

The company intends to have a free float of at least 25 percent, noting that the group’s founders and Baupost will remain significant shareholders. Trading is expected in early November.

Reversal of fortunes

Bakkavor was founded in 1986 by Agust and Lydur Gudmundsson in Iceland, with the aim of manufacturing and exporting fish products to Scandinavia. The company quickly expanded, entering the UK market in 2000 through the acquisition of Wine & Dine, a dips and dressings company.

The Telegraph noted that the Bakkavor IPO marks a reversal of fortune for the Gudmundsson siblings, who borrowed to fund the company’s expansion, and came unstuck when the financial crisis hit the Icelandic banking system in 2008. They were subsequently forced into a debt-for-equity swap, teaming up with Baupost last year to take back control.

Agust Gudmundsson will remain CEO of the company, while his brother Lydur will step aside as chairman but will remain on the board as a non-executive director. Simon Burke, a former chief executive of Virgin Retail UK, Virgin Entertainment Group and Hamleys, will become the new non-executive chairman. 

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