The equipment hire firm is banking on UK economic growth.
Equipment rental company HSS Hire yesterday started the engine on a £103m float aimed at selling a quarter of the company’s stake and reducing its £200m debt pile.
The listing, like that of the Trainline.com, announced last week, will include a retail offering to open up potential profits to its loyal customers and could also include a 15 per cent over-allocation.
Chris Davies, chief executive of HSS Hire, said he hoped the company could reap rewards from the improving UK economy.
“Over the last five years we’ve grown our business well across the UK and Ireland and since 2012 particularly we’ve really accelerated that growth,” he said. “We see the opportunity with improving markets at the moment to access new capital markets to make sure we have the best capital to continue to grow.”
Asked why the Heathrow-headquartered business was including retail investors, Davies said: “We’ve been around 57 years. A lot of people know of us. We have strong brand awareness. People see our trucks and branches and they’ve used our equipment. So we felt there would be a reasonably good interest in our business. We’re a solid business and there was a feeling that a strong business with a good returns profile would resonate well with retail shareholders.”
HSS Hire is currently 80 per cent owned by private equity group Exponent, with the rest owned by management. It is the second-largest provider of tools and equipment after FTSE 100 rival Ashtead – renting out everything from temporary power units, to cherrypickers, scaffolding and wallpaper strippers – and prides itself on its growth in tough times.
“When I joined the business eight years ago, before the recession, we slimmed the business down,” said Davies. “We had an agglomeration of branches – the wrong ones in the wrong places. We pruned it down to 220 then started re-building our network in trade parks.
“We had a tough recession but we started it with 1,600 staff and now we have 2,900. We’ve rebuilt the business, introduced a new computer system to help customers save money and – apart from one year when we had a 13 per cent decline, compared to the market going down 18 per cent – we’ve grown every year.”
HSS reported 17 per cent growth in revenues in the year to September and expects further expansion.
Davies, a 60-year-old father-of-two, whose background includes roles at Walt Disney, Staples and Hunter, the boots maker, says the firm now has 265 branches and is opening more, at a rate of one per week, with a target of 500 over the next four years.
“I spend most of my time out in the field,” says Davies. “Last Monday I was in an industrial estate in Reading and tomorrow I’m out with a large new customer.
“The most important thing is keeping your feet on the ground and not forgetting about your customers and your investors.
“We use their money to grow our company, but they also expect us to use it wisely and deliver good returns. I never forget that.”
BEHIND THE DEAL: NIGEL MORRIS | SOLID SOLUTIONS ASSOCIATES
1 Morris is working alongside Graham Webb on the deal’s retail offering, the second in as many weeks this year. The first deal, for Trainline – which like HSS Hire has private equity firm Exponent as an owner – also involved the same banking team of JP Morgan Cazenove and Numis.
2 A former engineer, Morris ran his own business then became a project management consultant for Coopers & Lybrand and Price Waterhouse, working on government and private sector share offers. He left to form Solid Solutions Associates 25 years ago.
3 Deals have included intermediary offers for Merlin Entertainments, Direct Line, Royal Mail and Saga. United Biscuits and RAC are among the listings that failed to launch.