AO IPO: Kitchen appliances retailer unveils plans to raise £60 million

on Feb 7, 2014
Updated: Apr 9, 2020
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iNVEZZ.com, Friday, February 7: UK online retailer of domestic appliances AO is set to join a rush of recent retail flotations in London, having unveiled plans to raise about £60 million via an initial public offering (IPO) next month.

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AO details London IPO plans
Bolton-based AO, which sources, sells and services domestic appliances via its website, today announced in a statement its intention to launch an IPO on the London Stock Exchange’s (LSE) Main Market. AO owner DRL Holdings Limited noted in the statement that it would be re-registered and renamed as AO Plc. The company expects to list in March and to be eligible for inclusion in the FTSE UK Index Series at the quarterly review in June 2014.

The company’s share offer will comprise an offer of new shares to raise gross proceeds of approximately £60 million and an offer of existing shares to be sold by the selling shareholders. The retailer noted that the selling shareholders in the AO IPO included “some of the company’s directors, senior management and business angel investors”. AO’s biggest shareholder is the group’s co-founder and chief executive John Roberts who owns about 40 percent of the company.

The Financial Times today quoted an unnamed source familiar with the matter as saying that the target valuation range was between £800 million and £1.4 billion. One analyst told the FT that an £800 million valuation would give the company a price to earnings multiple of about 73 times, assuming full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) of £11.1 million this year.

AO.com, which says that it had 24 percent of the online market for major appliances in the UK in 2012, had sales of £275.5 million for the year to March 2013, an increase of 29.6 percent year-on- year.
Strong year for retail listings

The news of the AO IPO comes in what is shaping up to be a strong year for London IPOs with retailers in particular seeking to take advantage of growing consumer confidence in the UK with the country’s economic recovery gaining traction.

Earlier this week, news emerged that discount retailer B&M Retail was preparing for what would be one of the biggest stock market floats this year. (Fat Face IPO: Fashion retailer dresses up for London flotation)
Outside the retail sector, Oxford-based biotech company Circassia yesterday unveiled plans to raise about £175 million in a London IPO. (Circassia IPO to bank on hopes for cat allergy cure) The company, spun out of a lab in Imperial College, plans to use the proceeds to fund the commercial launch of its flagship cat allergy treatment and to launch final clinical testing for its ragweed, grass and dust mite products.

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