Debenhams set for £3bn float

By JIM ARMITAGE
Updated:

 

DEBENHAMS kicked off its flotation plans today with a price range valuing the department stores chain at between £2.88bn and £3.15bn.

Rob Templeman

Even though the pricing includes £1.2bn of debt, the launch will be the biggest stock market float so far this year. The shares will be listed at between 195p and 250p with the float planned for 4 May.

Its success will be seen as a key indicator of the underlying strength of the bullish stock market. But investors may get the jitters from trading figures in today's documents that show sales growth has slowed to 1.7% in the 32 weeks to 15 April.

Arch-rival Marks & Spencer enjoyed 6.8% sales increase from stores a year or more old in the last quarter.

While today's numbers were an improvement on the 0.6% growth in the six months to 4 March, the numbers were well down on Debenhams' 2.8% gain in the year to last September.

Debenhams was always said to be one of the chains that would be hardest-hit by a recovery at M&S. However, chief executive Rob Templeman's team said the figures were in line with its expectations. In today's document, it states: 'The directors believe that Debenhams' performance since the end of the last financial year compares favourably with other UK retailers.'

The statement adds that better profit margins and improved market-share demonstrated the business's resilience in what they called 'challenging' market conditions.

Templeman today began a series of presentations with potential City investors. He will soon head off to meet big fund managers on the Continent and in the US.

 

Picking stock market winners
This is Money can help show you the best ways to invest in the stock market. Here are some of our best bits...
 >> A starting point for market data
>> Risers and fallers
>> Tips & Tactics (includes Daily Mail on MoS share tips)
>> Fund tips from the experts

 

Templeman, chairman John Lovering and finance director Chris Woodhouse will make a combined £100m paper profit in the listing.

They will be allowed to sell up to 30% of their shares in the offer but will commit to retain their remaining stakes for at least a year.

Venture capitalists Texas Pacific, CVC and Merrill Lynch, which bought the business in 2003, will retain 'significant' shareholdings after the float but will only commit to hold on to their remaining stakes for six months. They bought Debenhams off the stock market for £1.7bn but have refinanced the business and taken out £1.3bn in dividends.

The float will be particularly closely watched because of the company's status as a consumerfacing business. While the FTSE 100 index has surged above 6100, much of the gain has been because of high oil and commodities prices, which have spurred big share rises in exploration companies.

Consumer confidence, particularly with regards to shopping on the High Street, remains wobbly at best as people fret about the value of their homes and future rises in interest rates.

Most watched Money videos