DFS Furniture Makes Subdued Market Return After 10-Year AbsencePaul Jarvis
DFS Furniture Plc made a subdued return to the London stock market Friday after the U.K. sofa retailer priced its initial public offering toward the low end of an indicated range.
The shares traded at 260.25 pence as of 8:49 a.m., rising 2.1 percent from the 255 pence IPO price. That values the Doncaster, England-based company at about 554 million pounds ($843 million).
Investors “are clearly nervous about DFS’s prospects after the election,” Nick Bubb, an independent retail analyst, said in a note, referring to the vote in May for members of the U.K. parliament. The range for the IPO price was 245 pence to 310 pence.
Topps Tiles Plc Chief Executive Officer Matt Williams said in January the chain started to see consumer confidence moderate ahead of the election. Still, such concern isn’t holding back shares of most British retailers, with the FTSE 350 General Retailers Index rising to a record this week.
DFS is the latest in a long line of retailers to sell shares in the U.K., on the heels of a year when London IPOs raised about $6 billion, the most in more than a decade, according to data compiled by Bloomberg. Competitor ScS Group Plc returned to the stock market in January with a listing that valued the company at 70 million pounds.
DFS’s IPO will raise 98 million pounds for the company, which will be used to reduce debt and provide access to cheaper financing. Existing shareholders, including funds managed by the company’s private-equity owner, Advent International Corp., will receive gross proceeds of 108.4 million pounds.
Advent will continue to own 55.9 percent of the company after the IPO, with DFS’s directors holding 3.2 percent, assuming that an over-allotment option isn’t exercised.
DFS says it is leader of the 3 billion-pound U.K. upholstery market with a 26 percent share. Founded by Graham Kirkham in 1969, the retailer was acquired by Advent in 2010. Prior to that, it spent more than 10 years as a listed company before being taken private by Kirkham in a 2004 deal that valued the company at 507 million pounds.