By James Davey and Freya Berry
LONDON (Reuters) - British greeting cards retailer Card Factory plans a stock market flotation that could value it at 1 billion pounds, joining a spate of store chains seeking public listings as the outlook for consumer spending brightens.
UK retailers including discount chain Poundland, newsagent McColl's, Pets at Home and online fashion outlet Boohoo.com have already listed this year on the back of improving consumer sentiment.
Fashion chain Fat Face and discounter B&M are among other store groups set to come to market as UK economic growth picks up and unemployment falls. A survey showed British consumer sentiment had risen last month to its highest level since around the start of the financial crisis in 2007.
Card Factory, which analysts have estimated to have a total equity value of up to 1 billion pounds, said it expected to raise 90 million pounds from an offer of new shares to institutional investors.
It will also sell existing shares to raise its "free float" of readily tradeable stock to 25 percent. A source familiar with the matter said the value of these shares could total up to 160 million pounds.
Senior management, including Chief Executive Richard Hayes, will be selling shares as part of the offering, though a source close to the matter said the amount to be sold had not yet been settled.
Card Factory, whose listing is planned for May, joins a rush of flotations or initial public offerings (IPOs) seeking to capitalise on rising stock market confidence, with Britain's FTSE All-Share index having risen this year to an all-time high.
The trend is reflected across Europe, where the value of IPOs soared 191 percent to $15.2 billion (9 billion pounds) in the first three months of 2014, the highest first-quarter total since 2000.
Card Factory, majority owned by private equity group Charterhouse Capital Partners, focuses on the value and mid-market segments of Britain's 3 billion pounds-a-year greeting cards market.
It said it sold over 285 million single cards in the year to January 31 2014 - driving revenue up 9.0 percent to 326.9 million pounds and boosting underlying core earnings or EBITDA 9.2 percent to 80.4 million.
The company, whose profitability is illustrated by its margin of 24.6 percent, plans to expand its 700-strong store chain to a target of 1,200 in Britain and Ireland.
It intends to use the net proceeds from the share offer to reduce net debt, expected to be about 160 million pounds on admission.
Morgan Stanley and UBS are joint global co-ordinators on the listing. Nomura is acting as joint bookrunner, with Investec as joint lead manager. STJ Advisors is advising the float.
(Corrects to remove reference to the non-executive chairman as one of the senior managers that could sell shares)
(Editing by Mark Potter and David Holmes)
- Investment & Company Information
- Card Factory
- stock market flotation