SSP Group Ltd. Chief Executive Officer Kate Swann downplayed concern that demand for initial public offerings may be running out of steam as she unveiled plans for a return to the stock market less than a year after leaving retailer WH Smith Plc.
SSP, a U.K. operator of about 2,000 food outlets in airports and train stations, said today that it is seeking to raise 500 million pounds ($849 million) to help repay debt. The listing comes after companies including airline Wizz Air Ltd. and retailer Fat Face Group Ltd. postponed plans to list in London following a surge in IPO activity earlier this year.
“The market is bound to have its ups and downs on a day-to-day, month-to-month basis, but if you are fundamentally strong business, the market sees through to that,” Swann, who joined SSP last year after a decade with WH Smith, said by phone. “The market is always interested in fundamentally good businesses.”
SSP joins a throng of consumer-facing companies to seek listings this year amid improving economic conditions. Just Eat Plc, (JE/) a U.K. online takeaway service, along with retailers such as AO World Plc and Poundland Group Plc have tested investor demand. Companies have raised more than 22 billion pounds in London IPOs this year, according to data compiled by Bloomberg.
An IPO “is the appropriate next step for a business of SSP’s caliber, size and international scale,” Swann said. “We believe that we are well-placed for life as a listed company.”
In addition to raising funds for the London-based company, the IPO will provide owner EQT Partners AB and senior managers with the chance to realize part of their investment, SSP said. Stockholm-based EQT bought SSP from Compass Group Plc in 2006, backed by more than 1 billion pounds of leveraged loans.
The net proceeds of the IPO will be used entirely to pay down debt, Swann said. The company said it has refinanced existing borrowings with a 510 million-pound multicurrency loan and a 75 million-pound revolving credit facility. It expects to have net debt of about 450 million pounds after the IPO.
Raising money isn’t the main reason for the listing, Swann said, adding that the company is “very cash generative and we’re not short of funds if we wanted to invest.”
SSP operates concessions for companies including Starbucks Corp. and Burger King Worldwide Inc. in Europe, North America and Asia. Earnings before interest, tax, depreciation and amortization increased 13 percent to 54 million pounds in the six months ended March 31, the company reported June 9. Sales rose 4.6 percent to 865.8 million pounds.