TOOL rental firm HSS Hire plans to float on the stock market next month in a move aimed at reducing its debt and benefiting from growing demand in the construction sector.
The company, which is the second-biggest tool hire firm in the UK behind Speedy Hire, said the float will include an offer of shares to institutional investors as well as an intermediaries offer to encourage participation by retail investors.
Existing shareholders, including Standard Life, will sell down their stakes as part of the float under which the firm, which employs 2,900 people, aims to raise around £103 million.
HSS said the move would look to capitalise on its position as “a leading player in a growing market with attractive structural growth characteristics”.
The European Rental Association estimates that the total UK equipment hire market revenue will grow at a compound rate of 4.3 per cent between 2014 and 2016. HSS said it was also well-placed to continue to benefit from the ongoing drive of larger businesses to outsource non-core activities.
In addition, HSS is targeting the market share of around 48 per cent held by small independents through the roll-out of an HSS local branch format across trade parks. HSS currently has 34 such branches in operation and plans to grow its total network to more than 500 locations across the UK and Ireland.
Chris Davies, chief executive, said: “HSS has outperformed the UK tool and equipment hire market in recent years by offering its customers a powerful combination of safety, value, availability and support.
“By focusing on the more attractive and less cyclical segments of the market and building a sophisticated distribution network that has enabled a step change in availability and utilisation, we have established a track record of delivering industry-leading growth.
“Having built a well-differentiated market position and a scalable business model underpinned by capital efficiency, we have an exciting opportunity ahead of us as we implement our growth plans. A public listing will put the business on the best footing to maximise our potential as the recovery in our markets gains momentum, enabling us to scale our model faster and accelerate our growth.”
Following the market debut it is expected the firm will have a free float of at least 25 per cent of its issued share capital.
The company has more than 35,000 customers ranging from large, blue-chip companies to smaller, local businesses across a range of sectors.
It operates from 65 locations, serviced by a delivery fleet of more than 400 commercial vehicles and 36 distribution centres, The group also operates a specialist training business which offers 240 technical and safety courses at 36 venues throughout the UK and Ireland.
HSS was founded in 1957 by Bert Taylor as The Hire Services Company. It was renamed Hire Service Shops in the 1960s following a merger with a rival.
l Meanwhile, GrandVision, the owner of eyewear retailer Vision Express, plans to sell a 20-25 per cent stake in the business on the Amsterdam stock exchange, potentially worth more around £468.6m.
A number of other businesses are thought to be looking at flotation plans including sofa retailer DFS, poultry business Moy Park and second-hand car business Auto Trader.
Last year saw a record number of flotations on the UK markets including AA, Just Eat, Pets At Home, Poundland, Saga and Zoopla.