Virgin Wines floats in £110m IPO, Connection reaps 7.6x

The company placed 6,615,413 new ordinary shares and 17,731,286 existing ordinary shares – both priced at 197 pence per share – resulting in a £110m market cap.

At the time of writing, share price had risen to 229 pence per share.

The listing was expected to raise gross proceeds of £34.9m for the selling shareholders and £13m for the company.

Liberum Capital was acting as nominated adviser and sole broker in relation to the admission.

Four VCTs advised by Mobeus Equity Partners will own approximately 36.1% of the business post-listing, with senior management owning approximately 20.3%. Connection Capital made a full exit, reaping a 7.6x multiple.

No shares were sold by the Mobeus VCTs, although loan notes were repaid as part of the process, Mobeus director Ed Wass told Unquote. The VCTs are under a lock-in period for six months from the date of admission; in addition, the VCTs will only be able to deal shares through Liberum for a further six months after that.

Wass added that investment performance to date (realised and unrealised) was similar to Connection Capital's.

Virgin Wines said it intends to use the net proceeds, together with some of its existing cash resources, to repay preference shares and existing loan notes.

Previous funding
Mobeus Equity Partners and Connection Capital invested a combined £15.9m of debt and equity to support the management buyout of Virgin Wines in 2013. The company was acquired from Direct Wines with no external senior debt.

The group went on to invest in its new website, direct marketing, and new customer acquisition channels and propositions, the selling shareholders said in a statement. In addition, it built a gift and corporate business to complement its existing offering.

Sky News reported in October 2020 that shareholders had mandated Lincoln International to explore sale options for the business. All options for shareholders were considered, Wass told Unquote, with the IPO "offering all shareholders the opportunity to achieve their ambitions at this point in time at a very positive valuation".

Company
Established in 2000, Virgin Wines was purchased by Direct Wines in 2005. Current CEO Jay Wright had previously created mail order wine business Warehouse Wines, which was acquired by Direct Wines in 2002. Wright, alongside other executives, took over Virgin Wines in 2008 and merged it with Warehouse Wines in 2009.

The combined entity generated turnover of more than £35m at the time of the 2013 buyout. In the year to 30 June 2020, turnover was £56.5m, with EBITDA of £4.4m, Wass told Unquote. Current estimates for the year to 30 June 2021 are turnover of £70m and EBITDA of £5.6m.

People
Connection Capital – Michael Coupland (investment director).
Mobeus Equity Partners – Ed Wass (director).
Virgin Wines – Jay Wright (CEO).

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• Topics
• Exits
• Consumer
• UK / Ireland
• IPO
• Mobeus Equity Partners
• Connection Capital