Exova flotation first main market IPO since 2012

Scotland is to gain its first listed company on London’s main market for more than two years after Exova, a materials testing specialist, unveiled plans for a flotation that could see it valued as high as £750 million.

Exova was involved in the construction of the Burj Khalifa in Dubai. Picture: Getty

The Edinburgh-headquartered firm, which employs more than 3,600 people worldwide, is aiming to raise £110m when it joins the stock exchange next month.

The initial public offering (IPO) marks the first main market flotation for a Scottish firm since Energy Assets, the Livingston-based gas meter supplier, raised £15m when it listed in March 2012.

Exova carries out testing for a range of materials and products to make sure they comply with safety and quality standards, and was involved in the construction of the world’s tallest tower, the Burj Khalifa in Dubai.

The company was formed in 2008 when private equity firm Clayton Dubilier & Rice (CD&R) bought the testing division of specialist engineering group Bodycote for £417m. CD&R also owns a controlling stake in discount retailer B&M, which is another IPO candidate.

Pricing for the Exova float, which is expected in April, has yet to be announced. The firm, which operates 117 laboratories in 22 countries, today named Wood Group chairman Allister Langlands as its senior independent non-executive director. The issue of new and existing shares to institutional investors will be used to reduce its debts.

CD&R partner Fred Kindle, who chairs Exova, said the planned flotation was the “next natural step” for the company, which tests components for Airbus jets and Rolls-Royce engines. The company also boasts the likes of Boeing, Ford, Marks & Spencer and US space agency Nasa among its clients. On Wednesday it won a seven-year deal, worth up to £24.5m, from the Swedish Defence Authority.

The IPO will also provide an opportunity for its directors and senior management, led by chief executive Ian El-Mokadem, to cash in some of their investments.

El-Mokadem joined the firm three years ago from catering giant Compass, where he was managing director of its operations in the UK and Ireland.

He said: “By focusing on the provision of technically demanding, mission critical services, we believe we have built an enviable reputation for helping our customers around the world meet their testing requirements.

“I am very excited by the prospect of our future growth as a listed company. I believe we have the people, the robust systems and technical expertise to continue to fulfil the needs of our customers.”

Exova generated adjusted underlying pre-tax profits of £48.1m last year, an increase of 15.1 per cent on 2012, on revenues 10 per cent higher at £279m.

The company, which has its headquarters at Lochend Industrial Estate in Newbridge, is targeting a “progressive” dividend policy, with an initial payout ratio of between 20 and 30 per cent of adjusted net income before one-off items. At least 30 per cent of its shares will be available for public trading.

Its chief financial officer is Anne Thorburn, who previously worked for Greenock-based packaging specialist BPI and engineer Clyde Blowers.

The float is being managed by Credit Suisse and Goldman Sachs, with Barclays also acting as a joint bookrunner. Rothschild is acting as financial adviser.