* Company aiming for valuation around 1.5 bln stg - source
* Seeking to raise 275 mln stg to cut debt
* Plans to more than double vet surgeries, in-store grooming
* More UK retail flotations expected as economy improves
By James Davey
LONDON, Feb 19 Pets at Home is planning a London
stock market debut that values Britain's biggest pet shop group
at about 1.5 billion pounds ($2.5 billion), seeking to cash in
on an improving outlook for consumer spending and the nation's
love of pets.
The firm, mainly owned by U.S. private equity group KKR
, said on Wednesday it was looking to raise about 275
million pounds from the sale of new shares, which will include
an offer to retail investors, to pay down debt.
It also unveiled plans to more than double the number of its
veterinary surgeries and in-store grooming salons in a bid to
increase its approximate 12 percent share of Britain's 5.4
billion pounds-a-year pet care and retail market.
That market grew at a compound annual rate of 2.6 percent
between 2008 and 2012, faster than the broader UK retail market
and underscoring Britons attachment to their pets even during
difficult economic times.
The flotation plan is one of a string expected in Britain's
retail sector this year as the economy recovers from a long and
deep recession. Newsagent and convenience store McColl's, online
domestic appliances retailer AO and discount firm Poundland have
all said they plan to list soon.
Fat Face, House of Fraser, Boohoo.com and B&M are also
expected to come to market later this year.
"Pets at Home will be seen as an important test of investor
appetite for private equity owned retailers, as it has been
through a couple of owners in recent years, so the question is
how much has been left in the tank by KKR?," said independent
retail analyst Nick Bubb.
Founded in 1991, Pets at Home trades from 369 stores across
the UK, 246 small animal veterinary surgeries and 116 in-store
grooming salons. It employs about 6,000 staff, 93 percent of
them pet owners.
"This market remains highly fragmented which offers us
significant scope for further gains in share," Chief Executive
Nick Wood told reporters, noting Pets at Home's five largest
competitors have a combined total of just 225 stores.
He outlined plans for the firm to grow to over 500 UK
stores, more than 700 veterinary practices and in excess of 300
groom rooms in the medium term.
Wood, previously CEO of American Golf, joined Pets at Home
in June 2012. He and his management team are pictured with their
own pets on the group's website - Wood has two Bichon Frise
dogs, Oscar and Louis, along with the family hamster Snuggles.
Pets at Home said KKR, which bought it from Bridgepoint four
years ago for 995 million pounds, other shareholders and members
of the management team may also realise part of their investment
in the firm via the repayment of shareholder loans and a sale of
Pets at Home would seek a valuation of about 1.5 billion
pounds, a person familiar with the matter told Reuters.
The firm said at least 25 percent of its issued share
capital would be freely tradable post flotation.
The market will have an obvious benchmark in the valuation
of the leading U.S. pet care retailer PetsMart, which has a
market value of $6.7 billion.
Pets at Home said the 275 million pounds proceeds from the
share offer together with proceeds of 325 million pounds from a
new senior facilities agreement would repay all amounts
outstanding under an existing banking deal.
It expects to have net debt at admission to the stock market
of 275 million pounds - 2.5 times its forecast for underlying
earnings before interest, tax, depreciation and amortisation
(EBITDA) of 110.2 million pounds for the year to March 27.
Pets at Home's total revenue grew 11.7 percent in the 40
weeks to Jan. 2, while like for like revenue grew 2.4 percent.
Post flotation it plans to pay an annual dividend of 30-40
percent of fully taxed earnings.