Pets at Home grooms itself for flotation

Nick Wood, CEO of Pets At Home. Picture: Contributed
Nick Wood, CEO of Pets At Home. Picture: Contributed
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Pet accessories chain Pets at Home has joined the growing list of retailers lining up to join the London Stock Exchange, after unveiling plans for a flotation that could value the business at more than £1.2 billion.

The firm, which was founded in 1991 and is majority owned by US private equity firm KKR, is seeking to raise about £275 million through the initial public offering (IPO) to help reduce its debts. Chief executive Nick Wood, below, is also aiming to more than double its number of veterinary surgeries and in-store grooming salons in an attempt to expand its 12 per cent share of the UK’s £5.4bn pet care market.

Pets at Home currently has 369 stores and 246 vet branches across the UK, along with 116 Groom Rooms, where customers can arrange pampering sessions for their cats and dogs.

Wood said: “This is a very exciting time for Pets at Home as we continue to innovate for our customers in both our products and services, and look to drive our expansion programme in the UK to over 500 stores, more than 700 veterinary practices and in excess of 300 Groom Rooms in the medium term.”

The flotation is one of several expected in the retail sector this year. Discount store chain Poundland said on Tuesday that it was preparing to join the market next month, while newsagent McColl’s and online appliances retailer AO have also set out their float plans in recent weeks. Sources said Pets at Home could be valued at anywhere between £1.2bn and £1.5bn, and retail analyst Nick Bubb described the firm as a “pretty stable and predictable business”.

Underlying profits grew 11.1 per cent to £87m in the 40 weeks to 2 January and are expected to be at least £110.2m for the full year to the end of March.

Bubb said: “Pets is a great business, but it will be seen as an important test of investor appetite for private equity owned retailers, as it has been through a couple of owners in recent years, so the question is how much has been left in the tank by KKR.”

KKR bought the firm from rival private equity house Bridgepoint four years ago in a £995m deal and could cash in on part of its investment through the repayment of shareholder loans and the sale of new shares.

Pets at Home also announced the appointment of four board members ahead of its float, including Halfords chair Dennis Millard. He will act as deputy to chairman Tony DeNunzio, who has been at the helm since KKR took control in 2010. Full details of the IPO, which will include a portion of shares for sale to employees and retail investors, will be published in the coming weeks. At least 25 per cent of its issued share capital will be available for trading post-flotation.