House of Fraser IPO: Rothschild to manage share sale

on Nov 11, 2013
Updated: Oct 21, 2019
Listen, Monday, November 11: British department store group House of Fraser is sticking to its IPO plan and is close to appointing investment bank Rothschild to manage the floatation, which is expected to happen at the beginning of next year, the Sunday Times reported yesterday. The newspaper’s sources claim that Rothschild would nominate several other advisers to help with the share sale. The potential initial public offering is expected to value the retailer at about £350 million.

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House of Fraser, which has 61 stores in the UK and Ireland, was delisted from the London stock Exchange in 2006, following a £350 million buyout by a consortium led by Iceland’s Baugur Group, which invested heavily in the UK High Street at the time. Baugur Group, which owned stakes in more than 20 UK retail brands, applied for bankruptcy protection in February 2009, after placing its UK arm in administration. Thus, 49 percent of House of Fraser is controlled by representatives of failed Icelandic banks such as Landsbanki. Another 20 percent of the department store chain is owned by its chairman Don McCarthy and his family, while retail entrepreneurs Sir Tom Hunter and Kevin Stanford hold 11 percent and 10 percent, respectively. The complicated shareholder structure might have contributed to the fact that negotiations for the takeover of House of Fraser by several interested parties, including Sports Direct and the Qatari royal family, have failed during the past year.

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House of Fraser, founded in 1849 in Glasgow, posted EBITDA of £61.1 million for the fiscal year to January 26, 2013, up 4.3 percent year-on-year, as sales rose by three percent to a record high of £1.2 billion thanks to rapidly growing online sales. The retailer employs 7,300 people as well as 12,000 concession staff.

**IPO frenzy**
House of Fraser’s IPO plans come amid rising markets and strong IPO activity, both in London and the rest of the world. The recent London IPOs of Royal Mail (LON:RMG) and Merlin Entertainments have attracted huge investor interest. Excluding these two deals, the London Stock Exchange saw 25 IPOs in the third quarter that raised a total of €1.7 billion (£ 1.4 billion), up from 14 IPOs that raised €263 million in the same period last year, according to PwC’s IPO Watch Europe report.

A number of other companies have announced plans to list on the London Stock Exchange, including several retailers such as Card Factory, Poundland and DFS, as well as online takeaway group Just-Eat, insurer Just Retirement, and online property website Zoopla.
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Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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