Servelec IPO: Software firm set for biggest UK tech listing since 2010

By: Kalina Jordanova
Kalina Jordanova
Kalina was an Business & Management graduate who helped us research FTSE 100 companies. Kalina has since moved on… read more.
on Dec 2, 2013
Updated: Oct 21, 2019, Monday, December 2: British software and services company Servelec is set to launch its initial public offering of 68.3 million shares with an expected valuation of £122 million on London’s main stock market in the biggest UK float of a tech firm in three years, the Financial Times has reported.

Servelec is being sold off by Singapore’s CSE Global, a tech company whose shares are traded on the main board of the Singapore Stock Exchange. GSE Global acquired Servelec 13 years ago but is now exiting the British company to concentrate more on its operations in the Asia-Pacific region. Servelec’s IPO will be the largest float since Promethean World completed an initial public offering in March 2010 that valued the business at £187.5 million.

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Yorkshire-based Servelec was initially founded as a specialist for control systems in steel mills but it quickly expanded into the oil and gas and water markets. The group operates two divisions: Servelec Healthcare and Servelec Automation.
The software and hardware systems developed by the automation division are used to control the UK’s gas grid and elements of the nation’s water network. The firm’s controls technology is used by the Met Office to predict weather patterns in addition to North Sea oil and gas platforms, TV stations such as the BBC and ITV, and many of the nation’s lighthouses. The company’s healthcare division designs, develops and implements software for both the mental health and community health sectors in England. Servelec employs approximately 500 full time staff operating predominantly from offices around the UK, with the largest number based at the firm’s headquarters and engineering site in Sheffield.

Servelec’s IPO will be the first flotation by a company based in Yorkshire since the summer of 2012, when WANdisco, a software company with roots in Sheffield, listed on the junior stock market. Servelec applied for a main market listing rather than the more flexible AIM in order to attract bigger cheques from institutional investors, the FT quoted Servelec’s chief executive Alan Stubbs as saying.

On listing, Stubbs will have a stake worth approximately £1.5 million, while Schroders Investment Management and Henderson Global Investors are expected to hold 19.7 percent and 16 percent of the stock, respectively.
The company hopes its London IPO will help it to take advantage of opportunities in the national healthcare and blue-chip energy and utilities sectors, which are undergoing considerable structural and regulatory changes.

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The Yorkshire Post quoted Stubbs as explaining: “The present ownership structure as part of a larger group places a constraint on the management team to capitalise on these exciting opportunities. An IPO is the natural next stage of development for Servelec, providing the appropriate platform to drive growth both organically and through acquisition.”
Servelec posted a pre-tax-profit of £10.9 million last year on revenues of £39.4 million. It comes to the London market with £5 million in cash and no debt. According to Stubbs, the company will use the cash for acquisitions that were difficult under the umbrella of its Singaporean parent.
“What Servelec is good at is improving efficiency,” Stubbs pointed out. “We want to buy smaller companies with good technology that are looking to become part of a larger company to accelerate their growth.”
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