Has MHA’s first month as a public company been a success?
When UK accountancy firm MHA decided to press ahead with its initial public offering (IPO) last month, the listing attracted a few raised eyebrows.
Equity markets were dominated by uncertainty following Donald Trump’s tariff announcements and investors were fleeing equity markets.
One month later, some calm has returned, and for MHA, the decision to press ahead seems to have been the right one.
MHA’s global ambitions
MHA, formerly known as MacIntyre Hudson until its rebrand in 2019, is the UK member of Baker Tilly International, the global network of dynamic independent accountancy firms.
The group has laid out plans to become one of the UK’s top 10 accounting and professional services businesses with a target of at least £500m in revenue in the medium term.
Last year, revenue jumped nearly 30 per cent to £180m.
As other accountancy firms have turned to private equity to fund growth plans (including MHA’s Dutch sister firm) and generate liquidity, MHA didn’t opt for private equity investment.
Speaking to City AM last month, Rakesh Shaunak, CEO of MHA Plc, said, “For the right firm and the right investor, private equity is a valid option”.
However, “for MHA, the higher potential short-term gains from private equity were outweighed by the important distinction that the control of our strategic destiny and planning will remain in the hands of our board and our partners,” he explained.
The group’s long-awaited IPO went live on London’s junior stock market, AIM, on 15 April.
When the firm announced its plans to float, it targeted a £350m valuation while aiming to raise £125m; however, it ended up raising £98m and its valuation stood at £271m.
In the early afternoon of its launch day, the group’s share price rose 2.5 per cent from the opening price of 100p.
First deal
Today, its price is slightly up to 103.75p.
Speaking to City AM on investors’ opinions of the group so far, Dan Coatsworth, an investment analyst at AJ Bell, explained, “MHA has underperformed the broader UK stock market since listing, returning five per cent versus 6.2 per cent from the FTSE All-Share.”
However, he noted, “That’s not to say it’s been a bad investment, as five per cent in a month is still a decent showing.”
Last week, the listed accountancy firm revealed its first deal following the IPO, agreeing to buy Baker Tilly’s business in Cyprus and Greece, Baker Tilly South East Europe Holdings Limited for €24m (£20.1m).
The business is the fifth largest accountancy firm, after the Big Four, in Cyprus with a number of big-name clients in the financial and government sectors.
Pursuant to the Agreement, MHA expects to pay a fixed up front cash consideration of €6.5m, from the group’s existing cash resources, plus €17.5m to be satisfied through the issue of new ordinary shares in the Company at a price of £1.00 per share.
This deal marks what could be the first in a string of deals for the company, which is already making its presence felt in the market.
While Coatsworth noted that “it’s still early days for the company” and “Listed entity and many investors won’t be interested until it has produced at least one or two sets of financial results post-IPO,” MHA has set off on the right track.