By James Davey
LONDON Feb 7 British online domestic appliances
retailer AO plans to list its shares on the London Stock
Exchange in March, joining a rush of retail flotations and
providing a big payday for Chief Executive John Roberts who
founded the business in 2000.
The company will offer new shares to raise gross proceeds of
about 60 million pounds ($98 million) and offer existing shares
to be sold by the current owners.
Selling shareholders will include some of the firm's
directors, including Roberts - the largest shareholder with a
stake of about 40 percent - as well as senior management and
Roberts, 40, said he would dispose of a minority of his
holding. "This is not about a John Roberts exit, I will be the
biggest shareholder on the other side of the IPO," he told
AO expects at least a quarter of its share capital to be
floated in the sale.
Roberts declined to say what valuation AO was shooting for.
The Financial Times reported last month that AO was aiming for a
valuation of 1-1.2 billion pounds. The top end of that range
would put it on a multiple of about three times annual sales.
Independent retail analyst Nick Bubb pointed out Dixons
Retail, Britain's No. 1 electricals retailer which
sells appliances through its Currys chain and online and is more
than 10 times the size of AO in terms of total sales, has a
market capitalisation of 1.6 billion pounds.
AO plans to expand its product range, including a move into
televisions, and will evaluate expansion in Europe, initially in
It said it was well placed to benefit from further growth in
the UK online market for domestic appliances, which market
researcher OC&C forecasts will grow at a compound annual rate of
11 percent from 2013 to 2016.
The listing of AO is one of many expected in Britain's
retail sector in 2014. Russian hypermarket chain Lenta and
newsagent and convenience store McColl's have both announced
intentions to float in recent weeks.
Poundland, Pets at Home, Fat Face and House of Fraser are
also expected to come to market later this year, seeking to
capitalise from the UK's gradually improving economy.
Roberts said AO stood out from the crowd because it had
never had any private equity involvement, was debt free and had
a growth story to tell.
"When you look at the pipeline of IPOs that are coming
through a lot are re-heated private equity deals, or people
needing to do an IPO to refinance or restructure their balance
sheets," he said.
AO has recruited Brian McBride, chairman of online fashion
retailer ASOS, who is also a former managing director
of Amazon in the UK, as its senior independent
AO, based in Bolton, north-west England, sells about 4,000
products from over 30 appliance brands, installs, removes and
recycles old appliances.
It has a 24 percent share of the UK online market for major
domestic appliances, such as fridges, freezers and ovens, making
it the largest player in that market.
In the nine months to Dec. 31 2013 AO's sales rose 43
percent to 281 million pounds and it made an operating profit of
4.7 million pounds.
AO employs just over 1,000 workers and, according to
Roberts, has an obsessive focus on customer service. He said it
has two guiding principles for staff: "One is, treat the
customer how you would treat your own grandmother. The other is,
if you have to tell your mum at the end of the day what you've
done, would she be proud of the decision that you made?"