Biffa, the waste management business, has announced plans to raise £270m in the biggest UK flotation since the vote to leave the EU.
The 104-year-old company’s initial public offering (IPO) will value it at a reported £1bn or more and will consist of new shares and those held by its owners.
Biffa said it would use the money from the flotation, once transaction fees were paid, to reduce debt and pay the government in connection with a dispute over landfill tax. It also signalled plans to buy competitors in a sector with lots of smaller operators.
The flotation will mark a return to the stock market after Biffa was bought by a group of private equity firms in 2008 in one of the last big buyouts before the financial crisis peaked. The company, which was part of Severn Trent until 2006, was forced into an emergency restructuring in 2012 and was taken over by its lenders.
Biffa, which has an annual turnover of £927.5m and employs more than 7,000 people, is Britain’s second-biggest waste management company and has contracts with many local councils. It collects, processes and disposes of 6.6m tonnes of waste and recyclables for more than 95% of UK postal codes and 2.4 million households.
The once-booming market for flotations froze in the first half of this year as companies waited for the result of the EU referendum held on 23 June. The IPO market has shown recent signs of recovery: Pure Gym, the no-frills fitness chain, announced plans on Wednesday to raise £190m.
Setting out reasons to buy its shares, Biffa said the UK waste market was expected to grow 5% a year until 2020 as the population and number of households increase. Extra rules requiring separate collections and treatment of waste items would lead to more business, it said.
Smaller operators would struggle to cope with increasing regulation and complex supply chains, giving Biffa opportunities to buy competitors and cut costs, it added. It has been snapping up competitors and has a list of potential future deals.
Ian Wakelin, Biffa’s chief executive, said: “There are multiple levers for continued organic growth and margin expansion in a market underpinned by structural growth drivers which favour Biffa’s service-oriented business model. We operate in a fragmented market providing opportunities for further highly synergistic in-fill acquisitions.”
Underlying operating profit has increased to £62.5m from £33.6m in the past three years and recent trading has been good, the company said.
