KKR's Pets At Home IPO to value company at £1bn

Ellie Pullen
28 February 2014

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KKR-backed Pets At Home has set the price range for its IPO on the London Stock Exchange, valuing the company at more than ТЃ1bn.

The price range has been set at £2.1-2.6 per share, which would give the company a market cap of between £1.1-1.3bn.

The company is expecting to raise around £280m from the sale of new shares in the offering and will use the proceeds to pay down some of its debt.

In addition to the sale of new shares, KKR and other shareholders may partially exit the business through the repayment of shareholder loans or the sale of new shares.

Pets At Home's previous owner Bridgepoint also looked at a possible IPO for the company in 2009. It was reported at the time that the firm was in talks with NM Rothschild, Goldman Sachs and JP Morgan Cazenove to discuss exit strategies.

The company has a long history with private equity. KKR acquired the business from Bridgepoint in January 2010 for £955m, £371m of which was provided as debt by a syndicate comprising Commerzbank, KKR Capital Markets, Nomura and Crédit Agricole CIB. According to unquote" data, both Ardian and Partners Group provided mezzanine funding for the buyout.

Bridgepoint had acquired Pets At Home from 3i and Intermediate Capital Group (ICG) in July 2004 for £230m, with RBS providing debt for the deal. The firm bought the company via an auction process that saw 37 private equity houses bid for the business.

3i and ICG, alongside mezzanine provider AIB Group, bought the company in December 1999 from US-based Petsmart. 3i had already taken part in a £20m funding round for the business in January 1996, according to unquote" data, providing £5m of the total while RBS provided an equal amount in debt.

Just last April, KKR provided Pets At Home with acquisition finance for the bolt-on of Vets4Pets. The Guernsey-based company employed 900 staff and recorded turnover of £100m at the time of the acquisition, according to unquote" data.

Cheshire-headquartered Pets At Home operates 371 pet stores across the UK, as well as 250 small animal veterinary surgeries and 121 grooming salons for animals. The company recorded turnover of £598.3m and an EBITDA of £98.5m for the year ending March 2013.

The company claims that, in the 40-week period to January of this year, its revenues have experienced year-on-year growth of 11.7%, while EBITDA has grown by 11.1%. Pets At Home's net debt will stand at around £275m at admission on the stock market, equivalent to 2.5x forecast underlying EBITDA of £110.2m as of March 2014.