This morning (November 10) the company announced the offer price of its initial public offering (IPO) of 144,856,397 shares at 180p a share – representing 25% of the shares in the company and equating to a market capitalisation of £1bn, lower than that previously expected.
Commenting on the news, Clive Black, an analyst with stockbroker Shore Capital, said: “It would seem that Bakkavor’s shareholders really did want and maybe need to float and so the company and its advisors have dusted themselves down after the clear disappointment of the recent dress rehearsal and knocked on a few doors again but at a much lower price.
“That lower price will naturally leave a mellow feeling against the shareholders’ original expectations but at least they have ‘got it away’ leaving the executive team with the opportunity to focus on the day job again.
“We look forward to learning a bit more about the business as the disclosure documents become public and wish the company well as a new listed entity.”
Julian Wild, a partner with corporate finance firm Rollits, added: “It is very unusual for an IPO to be pulled and then quickly be brought back on again. The uncertain economic climate was blamed when it was pulled and that hasn’t changed.
“But there was some disappointment when it was announced that the float was being dropped, so that may have encouraged the current shareholders and advisers to think again.
“Clearly Peel Hunt [one of Bakkavor’s advisers] have stepped up to the plate and are taking a lead role in the IPO process, so they must be confident they can get it away.
“The offer price of 180p and market cap of £1bn looks realistic set against Bakkavor’s competitors. Having said that, trading conditions remain tough and none of Bakkavor’s major customers are finding life easy.”
Bakkavor has applied for admission of its shares to the premium listing segment of the official list of the Financial Conduct Authority and to trading on the LSE’s main market for listed securities.
Admission and the commencement of unconditional dealings are expected to take place at 8.00am on November 16 2017.
Bakkavor will receive gross proceeds of £100M from the offer, which will be used mainly by the group to further invest in the business and reduce its level of borrowings.
Following admission, BP-PE5 will hold 24.8% of the shares, while Bakk AL Holdings, an entity in which Agust Gudmundsson and Lydur Gudmundsson each indirectly owns a 50% interest, will hold 50.2% of the shares.
“The Board and I are delighted to welcome our new shareholders. It is particularly pleasing that our initial register has such a strong presence of well-respected long-term investors, reflecting an appreciation of the quality of the business and its long-term prospects,” said Simon Burke, independent non-executive chairman of Bakkavor, when the announcement was made.
Bakkavor ceo Agust Gudmundsson added: “This IPO represents a significant milestone in the development of Bakkavor. Our passion for making the best tasting fresh prepared food, underpinned by our expertise and our focus on innovation, has made Bakkavor the clear leader in an attractive and fast-growing market. We are pleased that this has been recognised by the investor community and look forward to delivering further growth and success as a listed business.”
Following completion of the offer, Bakkavor is expecting to be eligible for inclusion in the FTSE UK Index Series.
Full details of the offer will be included in the prospectus, expected to be published later today (November 10) and available, subject to certain restrictions, on Bakkavor’s website.