US web ad firm to raise £12.5m in London IPO

A US online advertising company will today announce plans to raise up to £12.5m on London’s Alternative Investment Market (Aim) as a springboard for expansion into Europe.

Digital Global Services (DGS), which buys advertising space on search engines and Facebook for telecoms companies, is looking to float in mid-February despite not yet having a presence in the UK.

Chief executive Jeff Cox told City A.M. that despite a dearth of recent London technology flotations, he expects strong demand for the shares. “If you look at our finances, it’s a strong growth company, we are highly cash generative and we pay dividends,” Cox said.

DGS will use the £9m-12.5m it expects to raise to launch operations in Europe, starting with Germany, France and the UK. The Colorado-based company is hoping to expand based on a reputation acquired by serving nine of the biggest 10 US telecommunications companies and Mexico’s three biggest operators.

The firm has capitalised on the increasing competition for online advertising space as more people search the internet for deals. DGS’s technology selects the best advertising slots to bid for on Google, Facebook and other search engines such as Yahoo and Bing, in an attempt to drive sales.

The company can also handle other parts of the sales process, for example by operating call centres. It then takes a fee for each sale completed, thus eliminating the risk of advertising for the seller.

The company has been profitable since 2009 – the year after it was founded – and it saw revenues grow by 65 per cent last year.

As well as expanding in Europe, DGS will use the cash to improve its operations in Latin America, and also branch out into offering services to other utilities clients such as gas and electricity companies.

ADVISERS DGS’S LONDON LISTING

N+1 SINGER
SHAUN DOBSON

Digital Global Services is being advised by small and mid cap company brokers N+1 Singer for its listing on London’s Alternative Investment Market.

The advisory firm was created in July last year from the merger of Singer Capital Markets and N+1 Brewin, in a deal that made it one of the top small and mid cap brokers in the UK. DGS’s listing will be one of the most significant in N+1 Singer’s time as a joint company. The team advising the US advertising firm is being headed up by Shaun Dobson, the broker’s head of corporate finance. He joined Singer Capital markets in 2009, following positions at Landsbanki Securities, Bridgewell and RW Baird. Dobson also advised British technology firm blur on its October IPO and recently helped N+1 Singer win a contract to become house advisers to Porta Communications.

Joining Dobson on the team were N+1’s Aubrey Powell, a director of corporate finance who joined last year after a 12-year stint at Panmure Gordon, and Matt Thomas, who worked at Singer Capital Markets before the merger.