(Adds comments from Swann, detail)
By Kate Holton
LONDON, June 17 Unfazed by a volatile IPO
market, retail industry veteran Kate Swann plans to raise around
500 million pounds ($840 million) through a London listing of
food and drink company SSP in the next few weeks.
Swann, who has spent 25 years in British retailing and joined
SSP as chief executive last year, expects to draw on her 10
years running WH Smith to improve the fortunes of a
company that operates food and drink outlets in airports and
railway stations in 29 countries.
With core earnings forecast for this year at around 165
million pounds, and on an average sector share price to earnings
multiple, SSP could have a stock market valuation of between 1.6
billion and 2 billion pounds including debt.
"There is always volatility and I think investors can see
through that to what is fundamentally a strong business," Swann
told Reuters. "If you have a strong business you don't have to
worry about that. We're in big, attractive markets."
After a rush of listings in London earlier this year, the
IPO market has turned more volatile in recent weeks, with two
flotations pulled and several trading below their IPO price.
The announcement by SSP follows the listing of Europe's
third-largest catering group, Elior, which returned
to the Paris stock market this month after an eight-year
Potential investors in SSP will be hoping Swann can repeat
her performance at Smiths, the British books, newspaper and
stationery retailer, where she cut costs, boosted profit margins
and expanded into the travel market.
Spun out of the world's biggest catering firm Compass
in 2006, SSP is now 94-percent owned by the Swedish
private equity firm EQT. It serves around 1 million customers a
day with some 30,000 staff and boasts such brands as Caffe
Ritazza and Upper Crust.
EQT bought its holding in SSP for 1.8 billion pounds in
While SSP plans to use the IPO proceeds to pay down debt,
Swann said the group had strong growth prospects, with more
people willing to fly as the global economy recovers and with
plenty of scope for improvement in its finances.
"We expect to continue to grow our space and places like
Asia Pacific, the Middle East, America will be high on our
list," she said.
Swann also thinks the business can be made more efficient.
In the six months to the end of March, SSP recorded a 13 percent
rise in underlying core earnings on constant currency terms, as
profit margins improved.
The company said the stock offering would enable existing
shareholders including EQT to reduce some of their stakes,
although they will agree to certain initial lock-ups.
($1 = 0.5956 British Pounds)
(Reporting by Kate Holton; editing by Paul Sandle and Tom