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Pets At Home Set For £275m Flotation

Pets at home

Hot on the heels of Poundland‘s announcement, now Pets At Home has revealed its intention to float on the London Stock Exchange. Rumours of this IPO have long been swirling around the City, and management hope to raise around £275m to reduce its debt.

The UK’s leading specialist retailer of pet food, pet-related products and pet accessories is majority-owned by US-based private equity group KKR, and this morning’s statement also stated that some shareholders — including KKR — “may realise a part of their investment in the Company through the repayment of shareholder loans and/or a sale of new shares”.

Pets At Home current counts 369 stores across the UK, 246 small animal veterinary surgeries under the Companion Care and Vets4Pets names, and 116 in-store Groom Room grooming salons. It is the clear leader in a large market estimated at £5.4bn — its nearest competitor has 78 stores, while the five largest rivals combined own 223 stores, 146 less than Pets At Home at present, although it is targeting in excess of 500 stores, 700 veterinary practices and 300 Groom Rooms.

CEO Nick Wood commented:

“We have delivered consistently strong financial growth and since 2009 we have gained share across all segments of the market. Our performance has been further characterised by an unbroken track record of positive LFL performance over the last decade. Even after the investment made in the business, our operational cash flow has remained consistently strong.”

It appears to be a good time for the flotation, as the specialist retailer has announced 11.7% total revenue growth in the 40-week period to 2 January 2014 compared to the same period last year, following average annual revenue growth over the last three financial years of 9%.

While Pets At Home is unlikely to see the same rapid share-price rise as Royal Mail following IPO, certainly there are some encouraging underlying growth figures in the business. It’s often best practice to wait until after a company floats, though, to buy in if you’re interested, in order to avoid the precipitous rises and falls that come with early buying and selling.

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> Sam does not own shares in any company mentioned.