By the end of April, it became clear to Stan Laurent that London’s doors were effectively closed to new consumer-facing internet companies. There had just been the perfect storm of disastrous market debuts from Just Eat and AO World, along with two profit warnings from Asos that triggered a sell-off in shares of fellow fashion retailer Boohoo.com.
The chief executive of Photobox – owner of online greetings card firm Moonpig – had been pushing ahead with plans for a London-listing that analysts said could have valued the business at up to £500m. However, by May those plans were in tatters.
“What we felt is that in the spring, after investors had been through the Asos profit warnings and the Just Eat initial disappointment, they were in a kind of hangover. It just didn’t feel timely to push on with a float,” says Laurent. “The rationale for prioritising a float over the last year was mostly that we wanted to move faster with consolidation. We’re gaining share organically and we’ve done a few deals but there’s still a big opportunity if we can pile more volume onto our European operation.”
Photobox, which is listed on the UK government’s Future Fifty ranking of high-growth tech firms, sells personalised t-shirts, mugs and cards, operating a group of online businesses, including Moonpig, PaperShaker, Sticky9 and its core Photobox brand.
Since 2000 the group has grown both organically with the addition of PaperShaker (offering birth announcements and wedding invitations) and through deals such as its £120m takeover of Moonpig in 2011 and its acquisition of fridge magnet printer Sticky9.
By July, Laurent had secured a £50m revolving credit facility from Barclays and Royal Bank of Scotland, which he says gives Photobox the ability to finance any deals it might want to pursue.
“So we sat there and thought: ‘Should we really pursue a float given the context?’ When in fact the main purpose of our potential IPO [initial public offering], which was to raise funds to be able to do deals, could be served through other means.”
The decision was made and Photobox’s plan to float was shelved. Despite the volatile conditions in London this year, Laurent says he remains committed to pursuing a listing in the City, once the timing is right. “I’ve very firmly decided that if we do list that we should do it here as opposed to elsewhere. We have two great brands here and about 50 per cent of our business is in the UK,” he says.
“We’re private equity backed and it’s no secret that one day we’ll be seeking an exit for our shareholders. As far as I can tell, when London’s capital markets hear a good story… maybe they’re a bit shy at the beginning, but they’re happy to do what’s necessary to be competitive in the cost of capital for the businesses.”
For now though those plans will have to wait. Instead Laurent is on the hunt for deals.
“Although we’re a leader in Europe, particularly in the UK and France with about 25 per cent market share, on a pan-European basis we’re around eight per cent of the market and our nearest competitor is just half of that,” says Laurent, who adds that Photobox is looking to grow aggressively.
So far Laurent’s strategy has been working. During the year to 30 April he delivered a solid 18.8 per cent sales growth, pushing Photobox’s revenues to £175.3m, with underlying profits stable at £19.8m. Let’s hope someone sent him a “congratulations” card.