Charterhouse's Card Factory joins IPO run

Alice Murray
22 April 2014

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UK greeting cards retailer Card Factory, backed by Charterhouse Capital Partners, is to list on London Stock Exchangeтs main market.

The offer is expected to raise proceeds of around £90m, which will be used to pay down the company's debt. As well as enabling a debt restructuring, the listing will allow Charterhouse to partially sell its holding in the company.

Morgan Stanley, UBS and Nomura are acting as joint global co-ordinators, joint sponsors and joint bookrunners on the IPO. Investec is acting as joint lead manager.

Charterhouse hired Goldman Sachs in 2012 to review its options regarding Card Factory, which was expected to result in a refinancing or an IPO. However, in July 2013, it was reported that the company had attracted interest from Advent International, KKR and Clayton Dubilier & Rice, with Charterhouse inviting interested parties into the data room. At the time, it was thought the company could have fetched up to £500m if sold to another financial sponsor.

The listing follows Warburg Pincus's recent flotation of value retailer Poundland, which has rewarded its private equity backers with a 4.5x return.

According to Charterhouse, the UK market for cards and gifts is valued at around £2.4-3.4bn and has weathered the financial downturn, having grown by 1.4% each year from 2009 to 2012.

In July 2011, Charterhouse supported Card Factory's acquisition of Getting Personal from Isis Equity Partners.

According to unquote" data, Charterhouse backed the management buyout of Card Factory for a reported £350m in April 2010. Lloyds TSB provided senior debt to finance the acquisition.

Card Factory operates 700 stores and reported revenues of £326.9m for the year ending January 2014, representing a 9% uptick on last year's figures. It generated underlying EBITDA of £80.4m and employs 6,500 people throughout the UK.

Founded in 1997 and based in Wakefield, the retailer designs and supplies greetings cards, gifts, plush items, novelties and gift wrap across the UK with a focus on affordable greetings cards; the majority of its cards are sold for less than £1.