Yes vote threat to Exova’s market listing in London

FEARS over the consequences of Scottish independence could pose a stumbling block for materials testing firm Exova’s hopes to raise £110 million by joining the London market, according to City insiders.

A spacewalk on the Nasa Space Station. Nasa is one of Exovas clients. Picture: Getty
A spacewalk on the Nasa Space Station. Nasa is one of Exovas clients. Picture: Getty

The Edinburgh-based group is aiming to become Scotland’s first main market listing in more than two years and its initial public offering (IPO), planned for next month, could see it achieve a valuation as high as £750m.

However, one City source said sentiment towards the upcoming float could be dented because of concerns over the impact of a Yes vote in September’s referendum.

“There’s still a lot of uncertainty over currency and European Union membership, so this could weigh on investors’ minds,” another insider said.

In its annual report, published last month, private equity-backed Exova highlighted a number of threats to its business if voters choose to separate from the rest of the UK.


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The firm, led by chief executive Ian El-Mokadem, said: “Risks associated with the referendum include: the currency that an independent Scotland would use; whether agreement and ratification of an independent Scotland’s membership to the European Union would be achieved by the target date (currently 24 March, 2016); the shape and role of the monetary system; and the approach to individual taxation.

“Any political instability prior to, or resulting from, the referendum or changes in legislation (including tax legislation), policy or currency as a result of independence could increase uncertainty around the group’s tax liabilities, 
future sources of revenue or costs of complying with new legislation or regulation.”

However, Garry White, chief investment commentator at Charles Stanley, said that ­Exova’s strong international presence should work to the company’s advantage and help to overcome any concerns about future currency options.

The company employs more than 3,600 people worldwide and boasts the likes of Boeing, Ford and US space agency Nasa among its clients. It generates about 75 per cent of its sales outside the UK and says the “overwhelming majority” of those are made using the same currency as its clients.


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White said: “I don’t think Scottish independence will be much of an issue for the IPO.

“Scotland has a very good history of intelligent engineering companies, like Weir Group. Frankly, Exova is just the sort of business we need in this country, or in Scotland if it were to become independent.”

Exova, which operates 117 laboratories in 22 countries, was formed in 2008 when private equity firm Clayton Dubilier & Rice bought the testing division of specialist engineering group Bodycote for £417m.