Electricals Firm AO Announces Flotation

AO — the internet-only electrical goods retailer, formerly known as Appliances Online — has announced plans to float next month and is expected to be valued at £1 billion.  

The company joins McColls, which confirmed plans for an initial public offering two weeks ago, while there is a queue of other retailers hoping to list on the London Stock Exchange, taking advantage of high investor confidence and a buoyant market.

The Bolton company is the largest online appliances retailer in the UK, with a 25% market share.  The group is seeking to raise £60 million, which will go towards enhancing its product line, as well as providing funds to expand the business into Europe.

AO, which was founded in 2000, sells domestic electrical items such as washing machines, fridges and cookers. Last year it began selling smaller appliances like coffee machines and vacuums, and plans a foray into televisions later this year.

John Roberts, AO’s chief executive, commented:

“AO has a strong track record of revenue growth and profitability and I am excited about the opportunities ahead as we continue to grow our new brand. We are exploring opportunities to expand the range of products and services that we offer and to internationalise our business. I believe these initiatives have the potential to deliver a significant change in terms of our addressable market and that a London listing will give us the platform to continue to grow our business. Ultimately, it is our ambition to be a leading European online electrical retailer.”

AO added that Asos chairman Brian McBride, formerly boss of Amazon UK , has been appointed a non-executive director. Asos has been a massive success story since its flotation, with its share price soaring 2000% over the last five years.

This year we’re expecting to see a rush of new businesses floating on the stock exchange, with retailers cheered by rising consumer spending. Last year IPOs raised £11 billion and analysts are predicting that this number will increase in 2014.

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Mark doesn't own shares in any company mentioned in  this article.