Freezer King bags £542m as AO.com soars
AO WORLD founder John Roberts is sitting on cash and shares worth around £542m after the online white goods empire he founded 14 years ago made a grand entrance onto the London Stock Exchange yesterday, with shares leaping 32 per cent.
Roberts has reduced his 40 per cent stake to 28.6 per cent, the company said, earning him about £86m and leaving him with around £456m worth of shares in the company, based on yesterday’s close.
The Bolton-based group, which claims to be the largest online appliance specialist, saw its market value leap to just under £1.6bn on the first day of conditional trading – when the City can trade shares before official trading begins.
The closing price of 378p was 32 per cent higher than the 285p offer price – which valued the company at £1.2bn – and even greater than the record gains made by Royal Mail on its first day of trading last year.
Jefferies, JP Morgan Cazenove and Numis are understood to have cut off their bookbuilding a day earlier than planned after the float was “multiple times oversubscribed”.
But analysts expressed concerns, comparing it to gains made by tech firms during the dot.com boom. Retail analyst Nick Bubb said: “AO has yet to prove that its recent success is sustainable or show that it can grow outside the UK.”
PROFILE: JOHN ROBERTS
JOHN Roberts’ idea for an online appliance business started in 2000 with a bet in a Bolton pub on Christmas Eve. Roberts wanted to quit his job as a kitchen salesman at Moben and his friend Alan Latchford, who went on to become a co-founder, bet him £1m that he would fail.
But 13 years later, Roberts has won his pound from Latchford – plus over £540m from creating a business that now accounts for almost 25 per cent of the UK online major domestic appliances market.
The 40 year-old, who claims “not to be very academic” and left school without any qualifications, founded Appliance Onlines, now AO World, with the aim of providing good quality and service. He told Retail Week last year: “Big retailers force you to focus on more than price so we started to think more about service because we had to.”
The company built its success by undercutting the big high street retailers like Comet – now defunct – and providing services such as same-day delivery.
It also set up a white-label business, creating online operations for other business – Sainsbury’s became its first partner, with Boots and B&Q all following soon after.
Roberts yesterday attributed its “obsession with customer service” for its market debut success, saying that investors had “understood our business model and our potential”.
ADVISERS
NICK ADAMS
JEFFERIES
JEFFERIES was brought in alongside JP Morgan Cazenove to assist AO on its £1.2bn float, acting as joint sponsor, bookrunner and global-co-ordinator. Numis also acted as bookrunner while Rothschild is AO’s financial adviser.
Nick Adams, managing director for UK country coverage at Jefferies was part of a six-strong team that advised on the deal. He joined Jefferies in 2012 after the US bank bought his previous firm Hoare Govett from RBS. Prior to joining the British stockbroker in 2009 in the global banking and markets team Adams spent 10 years with UBS.
But before striking big deals for investment banks, Adams was scoring points on the tennis court as a professional player. He spent two years on the professional tennis circuit and was ranked within the world’s top 600 before putting down his racket to pursue a more lucrative career. He has worked on several technology deals for Jefferies including advising Imagination Technologies on its acquisition of rival US chip designer MIPS in 2012 for £100m. Also acting for Jefferies were managing directors Ben Bailey and Lee Morton, European head of ECM Reinout Koopmans, Robert Foster,who is co-head of consumer and retail and European joint-head of investment banking Dominic Lester.