Directors of Midland retailer Poundland enjoyed a major windfall after its shares soared by 19 per cent following a stock market flotation today.
The Willenhall-based cut-price retailer floated at a price of 300p a share – valuing the group at £750 million – but that rocketed to £900 million in early trading.
It had risen to 356.13p by mid morning on March 13.
It means the offer raised gross proceeds of more than £400 million.
Institutional support for the flotation had been considerable with the issue rumoured to have been 10 times oversubscribed.
Selling shareholders comprise funds advised by Warburg Pincus together with certain directors, members of senior management, the ESOP trustee and other individuals. The company will not receive any proceeds from the offer.
At admission, Poundland had 250 million shares in issue with half of them “free floating” – meaning they are readily available in the market.
Following the offer, the Warburg Pincus Funds owns 37.9 per cent of the company, with Poundland directors and members of senior management taking a 10.2 per cent stake.
Jim McCarthy, Poundland chief executive, said: “I’m very pleased to welcome our new shareholders to Poundland.
“The combination of a track record of delivering strong, profitable growth underpinned by a well-invested infrastructure and a compelling growth story has attracted overwhelming support for Poundland’s IPO.”
The IPO will mean a major pay day for advisers and 155 senior managers of Poundland, who own a 25 per cent stake that could be worth close to £190 million.
The majority belongs to nine directors, Mr McCarthy, who made £5 million when US private equity Warburg Pincus bought its 75 per cent stake for £200 million four years ago.
Poundland is the largest single price value general merchandise retailer in Europe by both sales and number of stores. The Willenhall-based group opened its first store in 1990 and has grown to operate a network of over 500 across the UK and Ireland.
Admission to the premium listing segment of the London Stock Exchange is expected on March 17.