Traders paw off Pets at Home as shares fall back

Michael Bow
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PETS at Home shares fell by a whisker in initial trading yesterday as the £1.2bn float was left in the shade by a strong debut from fellow high street chain Poundland.

Pets, which floated at 245p yesterday morning, ended the day trading around 243p after falling as low as 230p during a rocky start in unofficial trading, which occurs a few days before shares list on the main market.

The slow start contrasted with a strong showing from Poundland.

Shares rose from a listing price of 300p to as high as 400p before closing at 366p – giving the discount chain a value approaching £1bn.

Prices are set to become firmer on Monday when the two firms start official trading on the London Stock Exchange.

“Both companies have ambitious growth plans, but they will need to make the right noises on growth if they are to receive support,” IG market analyst Chris Beauchamp said.

The two floats, which have been in the works since last autumn, will prove a boon for US private equity houses KKR and Warburg Pincus, which own Pets at Home and Poundland respectively.

Pets at Home raised £280m yesterday, with £210m of this going back to its major shareholders, KKR, and a management team led by chief executive Nick Wood.

Around 40 per cent of the company will be owned by public shareholders but KKR will retain a 46.2 per cent stake in the business and sell this down over time. Management will hold 4.3 per cent.

Warburg Pincus sold its stake in Poundland down from 76 per cent to 37.9 per cent yesterday, giving Warburg 4.5 times the return on its original investment in Poundland.

After management’s stake is taken into account, around 50 per cent of the shares in Poundland will be publicly tradeable.

The two floats form part of a raft of retailers coming to market over the next year, with firms such as Poundland rival B&M retail, House of Fraser, Card Factory, Fat Face and DFS all exploring plans to list in London.

Other private equity owned firms such as Brit Insurance, owned by CVC Capital Partners, are also coming to market.