SRG to raise £25m from IPO

City A.M. Reporter
The owners of British coal miner Scottish Resources Group are seeking to bank more than £200m next month by selling stakes held for 16 years in an initial public (IPO) offer.

The company is currently mostly owned by investment vehicles Parkburn and Palmaris Capital, who have held their stakes since 1994 when it was created out of the privatisation of UK state miner British Coal.

The two investors – which hold 71 per cent and 16 per cent in SRG respectively – could sell all their holdings through the offer, sources said.

Palmaris, in a separate statement, said it might sell “most or all of its shareholding”, but that a final decision depended on demand for the shares.

Scottish Resources will also seek to raise about £25m in new cash, to finance acquisitions and boost its balance sheet, the company said in a statement yesterday.

The company will announce a price range by the end of next week and the deal will result in a free float of nearly all the company, which may be valued at up to £250m, one banking source said.

Don Nicolson, chief executive of Scottish Resources said in an interview that the money raised for the company in the IPO is “sufficient for (the company’s) needs in the short to medium term”.

Scottish Resources is Britain’s largest surface coal mining company and accounts for 20 per cent of the country’s total coal production. It has nine operating surface coal mine sites in Scotland, which produced 3.4m tonnes of coal in the year to 27 March.


Scottish Resources Group is being advised on its possible flotation by the City broking house and investment group Panmure Gordon, whose chief executive is Tim Linacre.

Linacre said yesterday that the Panmure team on the deal is being led by Richard Gray. “It’s Richard’s deal,” said Linacre; “he’s known the group for years.”

Also working on the flotation is Edward Farmer and Giles Stewart. Gray himself preferred to keep a low profile ahead of the marketing roadshow that is taking place over the next few days. “It’s really early on in the process,” said a source, “and Richard will want to keep his head down until he knows the deal is definitely going ahead and until he knows the price at which the shares will be issued.”

Other advisers to Scottish Resources include the law firm Eversheds and the financial public relations group FD, whose team includes Billy Clegg, Edward Westropp and Geoffrey Pelham-Lane.

Palmaris Capital, which has a 16 per cent stake in Scottish Resources that it may be selling, is being advised by John Llewellyn-Lloyd and Harry Stockdale of Execution Noble & Co.