McColl’s IPO: Retail group tipped to float early next year

on Dec 2, 2013
Updated: Oct 21, 2019
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iNVEZZ.com, Monday, December 2: McColl’s Retail Group, which operates 1,273 convenience and newsagent stores across Britain, is expected to float on the London Stock Exchange at the beginning of next year, according to unconfirmed media reports. The Sunday Times claims that the 112-year-old company has appointed Numis Securities to advise it on the initial public offering, which is expected to value the business at around £200 million. The IPO is said to provide an exit for Caird Capital, which owns a 20 percent stake. Caird Capital, which was established by the former heads of HBOS’s private equity operation, acquired the McColl’s stake together with more than 40 other equity stakes from Lloyds Banking Group (LON:LLOY) after it rescued HBOS in 2008. Caird Capital has been selling these stakes over the past three years.

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According to Retail Week, the decision to pursue a listing of McColl’s has been fuelled by the successful IPO of rival Conviviality Retail (LON:CVR) on the Alternative Investment Market (AIM) for smaller companies earlier this year. Conviviality Retail, which runs 611 franchisee-operated stores throughout England and Wales, has seen its share price jump by 25 percent since its July flotation.

McColl’s Retail Group runs 700 convenience stores and 573 newsagents. It has doubled the number of
convenience stores over the last seven years and aims to boost it further to 800 by 2015. According to the latest available data, McColl’s operating profit was £15.8 million in the fiscal year ended on November 25, 2012, up 15.3 percent year-on-year, and gross sales were five percent higher at £1.17 billion. The company claims to have had an average of 4.67 million customers per week in October 2013.

Global food and consumer goods research group IGD has forecast that the UK convenience retail sector will grow from £36 billion now to £46 billion by 2018. Britain’s leading grocers Tesco (LON:TSCO),
Sainsbury’s (LON:SBRY) and Morrisons (LON:MRW) are all seeking to strengthen their presence in the market.

**IPO frenzy**
A number of other retailers, including Poundland, Pets at Home, Card Factory, B&M Bargains, Ao.com, House of Fraser and Boohoo.com, are expected to list on the London market, aiming to benefit from rising equity markets and strong interest in IPOs. UK retailers are also benefitting from a stabilising economic
recovery and growing consumer spending.

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.
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