Biffa, the waste management company, has cut the price of its flotation due to market nerves caused by worries over the economic impact of Brexit.
Britain’s second biggest disposer and recycler of waste said it would raise £262m before costs by selling new shares at 180p each. The initial public offering (IPO) of 47.2% of the company will value Biffa at £450m.
When Biffa announced plans to float last month it was reported to be seeking a market valuation of about £1bn. But last week the company failed to get investor support for a sale at 220-270p a share, which would have valued it up to £675m.
Investors have become increasingly concerned about the outlook for UK companies amid worries about Britain’s economic prospects, the plunging value of the pound and the government’s confrontational stance over Brexit.
Biffa and its owners, including private equity fund Bain Capital, were said to be determined to push the float through, suggesting they did not think markets would revive soon.
Biffa, which has an annual turnover of £927.5m and employs more than 7,000 people, works for many local authorities. It collects, processes and disposes of 6.6m tonnes of waste and recyclables for more than 95% of UK postcodes and 2.4 million households.
The company announced its intention to float a month ago amid signs of a revival in the market for flotations, which froze in the first half of this year as companies waited for the result of the EU referendum held on 23 June.
But several companies have since cancelled or shelved IPOs, including the fitness chain Pure Gym, which scrapped plans to raise £190m on 11 October. TI Fluid Systems, a maker of car parts, and the energy provider First Utility have also pulled their planned floats.
The flotation will mark a return to the stock market for Biffa after it was bought by a group of private equity firms in 2008 in one of the last big buyouts as the financial crisis grew. The company, which was part of Severn Trent until 2006, was taken over by its lenders in 2012 to save it from collapse.
Ian Wakelin, Biffa’s chief executive, said: “A return to the London Stock Exchange is a significant milestone for Biffa and a testament to the hard work of all our staff. This listing is an endorsement of Biffa’s business model, strategy, track record and prospects.”
Biffa said the UK waste market was expected to grow 5% a year until 2020 as the population and number of households increase. Additional rules requiring separate collections and treatment of waste items would also lead to more business, it said.
Conditional trading of the shares will start on Monday. Biffa said it expected to pay £19.6m in fees to advisers on the flotation and £16.8m for management incentives and other costs.
