Bakkavor goes back to Plan A as flotation back on menu

Abrupt U-turn after IPO cold feet last week Business to slash float offer price to stimulate interest

Bakkavor has changed its mind on plans for a flotation for the second time in a week, the food supplier saying it is now to press ahead with an initial public offering (IPO).

The move wrongfooted financial markets yesterday exactly a week after the company, which supplies some of Britain’s biggest grocery chains, pulled its plans for a public listing.

Bakkavor attributed its 11th-hour change of heart a week ago to “market volatility” despite the UK stock market being at or near record highs recently.

But the company said yesterday that it will launch a flotation which will value it at some £1 billion, raise £100 million and see about 25 per cent of its capital floated on the London Stock Exchange.

Bakkavor said a week ago that it felt the IPO would no longer be in the interests of the business or its current shareholders, but it is believed it has changed its mind after talks with investors.

The group, whose blue-chip customers include Tesco and Marks & Spencer, will also see the float offer price slashed from a mooted 195p per share to 180p share. The two Icelandic co-founders of the group, chief executive Agust and his brother Lydur, and US hedge fund Baupost, will retain a majority 75 per cent stake following admission to trading next week.

Simon Burke, chairman of Bakkavor, said yesterday: “The board and I are delighted to welcome our new shareholders.

“It is particularly pleasing that our initial register has such a strong presence of wellrespected long-term investors, reflecting an appreciation of the quality of the business and its long-term prospects.”

Gudmundsson added that the IPO was a “milestone” for the company – the UK’S largest maker of hummus – and which claims to have a 30 per cent market share in prepared meals, pizza and desserts.

Yesterday’s about-turn follows a flurry of pulled flotations recently.

Last week TV and mobile infrastructure firm Arqiva “postponed” plans for a £6bn IPO, also citing “market uncertainty”.

Business services provider TMF Group ditched plans for an IPO in October, opting instead for a sale to private equity firm CVC Capital.

It has triggered City speculation that, with markets riding high on the back of decent company earnings, investors want a bargain on flotation price because much of the good news from the would-be floats is already apparent.

mflanagan@scotsman.com