B&M Retail lines up £2.5bn stock market debut

Michael Bow
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B&M RETAIL, the discount shopping chain, yesterday batted away fears of a slowdown in London’s new issues market as it unveiled plans for a £2.5bn main market float.

The chain, founded in 1978 by a shopkeeper in Blackpool, said its £1.2bn turnover, ambitious expansion plans and overseas subsidiaries set the company apart from others trying to float.

“We recognise that market sentiment is mixed towards initial public offerings (IPO). However, the feedback we’ve received through informal soundings is that the market is very receptive and the feedback is very encouraging,” boss Simon Arora said.

The business, which was bought by Arora and his brother Bobby in 2004 and counts former Tesco boss Sir Terry Leahy as chairman, said it hoped to boost the number of stores from 373 to 850, adding around 40 stores a year.

Fears of a slowdown in the IPO market have been stoked by the failure this week of fashion retailer Fat Face to launch its flotation and the 10 per cent share price drop of newly floated budget chain Card Factory in its first day of trading last week.

B&M’s private equity backers Clayton Dubilier & Rice will sell some shares in the £75m fundraising, set to give the company a £2.5bn valuation.

In keeping with most private equity-backed floats, B&M has refinanced its debts and now has loan and credit facilities worth £590m in total.

The £75m will be used to pay down some debts and for general corporate purposes.

Despite having scores of stores in the south, B&M focuses mainly in the north of England and attracts a wide variety of customers.

Around 42 per cent of its shoppers were from the well-heeled ABC1 demographic, it said.

“Don’t expect to see B&Ms on Oxford Street or in zone one and two in London anytime soon. Our stores are in market towns and suburban district centres,” Arora said.

“Most of our shoppers live about a 10 minute drive from a B&M store.”

B&M – which sells everything from garden furniture to kids’ toys – currently has 49 stores in Germany, operating under the Jawoll brand.

“B&M is a first-class business operating in a genuinely exciting segment of the retail market, driven by a founder-led, ambitious and entrepreneurial management team,” Leahy said.

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