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Billion-pound stock market flotations heading for London
Following the runaway success of the US initial public offering (IPO) of Beyond Meat, which we correctly called in our overview of the market in May, London looks set for a swathe of billion-pound main-market offerings in the coming months.
The names heading for the London market include life insurance firm ReAssure, a subsidiary of the world’s second-largest re-insurer, Swiss Re. Although it may not be a familiar name for investors, ReAssure is actually the UK’s sixth largest life insurer.
Its registration document is due to be filed this Friday, although the final timing of the IPO – expected to value ReAssure at £3.5bn, putting it comfortably in the top half of the FTSE 250 mid-cap index – has yet to be decided.
Also in the financial space, household goods warranty provider Domestic & General is being prepared for IPO by private equity owner CVC.
After a failed takeover attempt by Homeserve (HSV) in 2007, Domestic & General was scooped up by venture capitalist Advent for £524m and then sold to CVC in 2013. Now, after more than a decade in private hands, D&G is expected to return to the stock market with a price tag of around £1.5bn.
The firm, which insures millions of boilers, washing machines, laptops and cameras in 14 countries including the UK, is chaired by David Tyler, who stood down from the chairman’s role at Sainsbury’s (SBRY) in March in anticipation of the retailer’s merger with Asda.
A third company expected to list in London this summer is Airtel Africa, a subsidiary of Indian telecoms giant Bharti Airtel.
The owners are hoping to raise $1bn (just under £800m) to fund its expansion in Africa, where it currently operates in 14 markets.
Major shareholders, aside from India’s Bharti, include Japanese venture capital fund SoftBank, Singaporean state-owned investment fund Temasek and the Qatar Investment Authority.
Transport booking group Trainline is also expected to float in London very soon. It tried to float in 2015 but was acquired by private equity days before the listing.
Investors who bought Beyond Meat at IPO must be leaping up and down at their success. On the first day of dealing shares jumped
by an incredible 163% to over $65.
Last Friday, the firm forecast that full-year sales would be $210m, marginally above the market consensus. However it also forecast break-even at the operating profit level while the market was expecting a $10m loss.
Chief executive Ethan Brown is confident that Beyond Meat will surpass investor expectations, claiming ‘we are very conservative and view this (forecast) as a floor’.
The shares surged again to hit $168.10, or more than six times its $25 IPO price.