Shares in DSW Capital rose 15 per cent today, following the professional services company’s debut on London AIM, marking a warm welcome to the market for the ‘Big Four’ challenger firm.
After raising £5m in its initial public offering (IPO), DSW achieved a market capitalisation of £21.4m, based on a share price of 100p.
Shares in the company, which owns advisory firm Dow Schofield Watts, initially rose 17 per cent upon its debut on AIM before closing the market at 14.5 per cent.
Chief executive James Dow said he was “really pleased” and “greatly encouraged” by the firm’s performance on its first day on the market which, he said, provided a proper reward to the firms’s backers.
The share performance was a “massive testament to the fact that investors appreciate a credible alternative to the Big Four firms,” Dow said.
He was very optimistic too about the “halo effect” from the firm’s listing, which will give the company the ability to recruit more talent from the Big Four firms.
The company describes itself as “one of the first platform models disrupting the traditional model of accounting professional services firms”.
DSW directors held back around a quarter of ordinary shares in the firm on its entry to the stock market.
The news of a challenger firm float which was founded by three ex- KPMG employees, comes as plans to force FTSE 350 companies to use challenger audit firms have reportedly been signed off by the business secretary as pressure for reform mounts.
The reforms will mean FTSE 100 and FTSE 250 businesses, whose financials are audited by any of the Big Four firms, will be forced to appoint a smaller audit firm in addition.
The challenger firm would work alongside their larger rival on a company’s audit – a process referred to a “managed shared audits”.
DSW may have its eyes on more than just its rivals clients though. It’s “challenger model,” the company said, attracts experienced senior professionals – mostly from the Big Four accounting firms.
“Joining AIM today is a momentous occasion,” said chief executive James Dow, who spent 13 years at KPMG.
“The UK accountancy marketplace is changing rapidly,” he continued. Earlier this week Dow said listing would help the challenger firm take advantage of opportunities presented by such changes.
“An increasingly onerous regulatory environment, combined with the desire for lifestyle change driven by COVID-19, is a heady mix, which makes DSW’s model increasingly attractive to ambitious professionals, who want autonomy, equality and opportunity and are seeking an alternative to the Big 4.”
The business said it plans to scale up its business by expanding across geographies, service lines and by investing in existing teams in larger firms.
The Group recorded operating profits of £1.7m for the year ended 31 March 2021m following strong growth over recent years. DSW also reported a two-year historical adjusted operating profit CAGR of 28 per cent.