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Pets at Home joins IPO rush Pets at Home joins IPO rush
(about 14 hours later)
Staff at the retail chain Pets at Home are set to share a windfall of £120 million as the company announced plans for a £1.5 billion flotation Pets at Home is hoping to cash in on the public’s love of animals by offering shares in the company to members of the public and employees, alongside institutional investors, as management confirmed plans for a £1.5bn flotation on the London Stock Exchange.
The private equity-owned business, founded 23 years ago in Chester, today became the latest in a long line of retailers announcing plans to join the stock market, following Poundland yesterday, whitegoods seller AO.com last week, and newsagent McColls last month. Around 500 staff, including Nick Wood, the chief executive, will share a windfall of around £120m, as they already own a 10 per cent stake in the company, with the remainder owned by the private equity firm KKR.
If the £1.5 billion valuation of Pets at Home is realised, it will be a significant success for current owner KKR, which bought the UK’s biggest pet shop business three years ago for £995 million. The business, founded 23 years ago in Cheshire by Anthony Preston, becomes the latest in a long line of private equity-owned businesses keen to sell up while investors are looking for companies into which to sink their money.
Chief executive Nick Wood told the Evening Standard that today was the perfect time to reveal long-mooted plans for the listing, with which it will raise £275 million, despite rival retailers fighting for a share of investors’ cash. If the £1.5bn valuation for Pets at Home is realised it will make the company one of the biggest retail flotations this year, in a considerable mark-up on the £995m paid by KKR just three years earlier.
He said: “We are unique in terms of our proposition and if any investor wants exposure in the UK pet market. In the private equity world I’m always asked ‘when are you going to see some returns?’ so, from now, having considered our options for some time, it is the logical step for our shareholders.” Mr Wood defended the company’s decision to list now, despite several retailers fighting over the same cash, suggesting that the business was unique as the UK’s largest pet business by a considerable margin. He said: “We are unique…  In the private equity world I’m always asked: ‘When are you going to see some returns?’ So now, having considered our options for some time, it is the logical step for our shareholders.”
He said the funds raised would be used to push forward expansion plans that will see the current portfolio of 369 stores grow to 500, alongside 700 veterinary surgeries and 300 pet grooming salons. The former chief executive of American Golf, who owns two bichon frise dogs, added that following the flotation he wants to expand the business to 500 stores (from 369), with 700 veterinary surgeries and 300 grooming salons.
Mr Wood, the owner of two Bichon Frise dogs, said employees would be given the chance to buy shares at the listing price. About 500 Pets at Home staff already own 10% of the company. Management said the float will see a minimum of 25 per cent offered, raising £275m, which will be used to pay down debt. It will also use £325m from new banking facilities to cut debt, which will leave it with net borrowings of £275m.
Management is also hoping the British public’s love of pets will translate into a successful retail portion of the flotation. The 6,000 staff in stores, who own 23,000 pets between them, are set to be given the chance to buy shares at the float price; Mr Wood said the general public will also be able to buy in, as he hopes to tap into the 1.6 million members on its mailing lists.
Other retailers eyeing up a stock market listing include online fashion business boohoo.com, sofa retailer DFS and department store House of Fraser, which would be making a return to the exchange after it was taken private in 2006. He said: “We believe it’s important to have as wide a shareholder base as possible. Our colleagues and customers love Pets at Home and have a common bond, an emotional bond, with our business.”
Yesterday’s announcement makes the company the fifth retailer to reveal plans to join the stock market this year, with another 10 in the pipeline. The newsagent McColl’s, white goods firm AO.com, discounter Poundland and Russian hypermarket group Lenta have all announced, while the online fashion firm boohoo.com, B&M Bargains, DFS, Card Factory, House of Fraser and Koovs are all thought to be eyeing a float.
Last night, Retail Week reported that AO.com has been heavily over-subscribed as it prepares its prospectus; however some in the City have suggested the mooted £1bn valuation is too high.