(Adds comments from Swann, detail)
By Kate Holton
LONDON, June 17 (Reuters) - Unfazed by a volatile IPOmarket, retail industry veteran Kate Swann plans to raise around500 million pounds ($840 million) through a London listing offood and drink company SSP in the next few weeks.
Swann, who has spent 25 years in British retailing and joinedSSP as chief executive last year, expects to draw on her 10years running WH Smith (LSE: SMWH.L - news) to improve the fortunes of acompany that operates food and drink outlets in airports andrailway stations in 29 countries.
With core earnings forecast for this year at around 165million pounds, and on an average sector share price to earningsmultiple, SSP could have a stock market valuation of between 1.6billion and 2 billion pounds including debt.
"There is always volatility and I think investors can seethrough that to what is fundamentally a strong business," Swanntold Reuters. "If you have a strong business you don't have toworry about that. We're in big, attractive markets."
After a rush of listings in London earlier this year, theIPO market has turned more volatile in recent weeks, with twoflotations pulled and several trading below their IPO price.
The announcement by SSP follows the listing of Europe'sthird-largest catering group, Elior, which returnedto the Paris stock market this month after an eight-yearabsence.
Potential investors in SSP will be hoping Swann can repeather performance at Smiths, the British books, newspaper andstationery retailer, where she cut costs, boosted profit marginsand expanded into the travel market.
Spun out of the world's biggest catering firm Compass in 2006, SSP is now 94-percent owned by the Swedishprivate equity firm EQT (Frankfurt: EQ6.F - news) . It serves around 1 million customers aday with some 30,000 staff and boasts such brands as CaffeRitazza and Upper Crust.
EQT bought its holding in SSP for 1.8 billion pounds in2006.
While SSP plans to use the IPO proceeds to pay down debt,Swann said the group had strong growth prospects, with morepeople willing to fly as the global economy recovers and withplenty of scope for improvement in its finances.
"We expect to continue to grow our space and places likeAsia Pacific, the Middle East, America will be high on ourlist," she said.
Swann also thinks the business can be made more efficient. In the six months to the end of March, SSP recorded a 13 percentrise in underlying core earnings on constant currency terms, asprofit margins improved.
The company said the stock offering would enable existingshareholders including EQT to reduce some of their stakes,although they will agree to certain initial lock-ups. ($1 = 0.5956 British Pounds) (Reporting by Kate Holton; editing by Paul Sandle and TomPfeiffer)
- Kate Swann