Poundland Latest Retailer To Announce Flotation

Poundland is expected to be valued at £750m and float in March.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 18 February, 2014 10:25 am GMT

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Poundland has announced its intention to float on the London Stock Exchange. The retailer first opened in 1990 and operates over 500 stores across the UK and Ireland.

It is among the discount stores that have been doing battle with established grocers like Sainsbury’s, Morrisons and Tesco, as squeezed household incomes see shoppers go after the cheapest prices.

Poundland is 76% owned by US equity institution Warburg Pincus, which acquired the retailer in 2010, while the balance is held by management, including chief executive Jim McCarthy.

Poundland’s revenue for the nine months ended December 31 was £750m while underlying earnings were £45m.

The group expanded into Ireland under the name Dealz in 2011 in what is described as a “low cost, low risk” expansion strategy. Dealz has been profitable since its first year.

Joining the board as non executive directors are Darren Shapland, Trevor Bond, Tea Colaianni and Grant Hearn.

The chief executive, Jim McCarthy, commented:

“That Poundland has attracted Non-Executive Directors of their calibre is a testament to the strength of the business. Their combined experience and retail insight will be invaluable to the Board. I believe we now have an excellent Board to take the Company into its next phase as a public company.”

At first shares will be offered to institutional investors and Poundland is expected to be valued between £700m and £800m.

This year we’re expecting to see a whole host of retailers joining the London Stock Exchange as hopes of an economy recovery cheer consumer confidence.