Market’s lukewarm reception to Xeros’ flotation

Bill Westwater, CEO of Xeros. Picture: Paul David Drabble
Bill Westwater, CEO of Xeros. Picture: Paul David Drabble
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​ENVIRONMENTALLY friendly washing machine company Xeros​ received a cool welcome when it floated on AIM yesterday, triggering worries that the appetite for IPOs could be flagging.

​​The group, a Rotherham-based spin-out from Leeds University, ​saw its share price slide 10.5 per cent to 110p on its first day of trading​, wiping several million off its initial market cap of £80m.

The group raised £27.​6m at 123p per share. ​

Analysts said the fall could be the first sign of fatigue in the IPO market as dozens of companies queue up to float as the economy shows strong signs of recovery. Shares in Pets At Home also fell on their market debut last week.

Analysts​ said that Xeros was very hard to value as unlike a retailer there is no real sense of how much the business can achieve going forward.​

“These things are very difficult to value,” said one Yorkshire analyst.

“That’s the problem with early stage businesses. It’s very reminiscent of the dotcom era. Often it’s hard to say what profits they will make.”

Despite the chilly reception, Xeros’ management was upbeat about the float.

Chairman John Samuel​ ​said: ​​“We have been delighted with the investor response to the​ ​placing, which has had strong support from a number of our existing key investors as well as new investors.

“Joining AIM marks a milestone for Xeros and we look forward to growing the business using the proceeds of the​ ​placing and creating value for all of our stakeholders.”

Chief executive Bill Westwater said Xeros’ patented reusable and recyclable polymer bead cleaning systems have the potential to transform a number of industries around the world​.​ “We are excited about the opportunity the placing and our admission to AIM brings to help accelerate our roll-out in commercial laundry and fund development through to commercialisation in other identified markets.

“I am very confident and enthusiastic about our future as we begin the next stage of significant growth as a public company and British university spin-out.”

Finance Yorkshire, which has invested a total of £1.45m in Xeros over three funding rounds, was also confident.

Alex McWhirter, chief executive of Finance Yorkshire, said: “Xeros is a great Yorkshire success story – an outstanding example of a technology-based company that has developed through innovation and some fantastic engineering an idea which now has huge potential to revolutionise the commercial and domestic laundry sectors.”

The funds ​raised from the IPO ​will be used to roll out Xeros’ technology into the commercial laundry market and to fund research and development into other areas such as the domestic laundry sector.

​​Xeros produces washing machines that replace most of the water with polymer beads.

The beads attract stains to the bead surface, extracting dirt and producing what the company claims is a superior result compared with traditional washing machines.

The group has developed its commercial laundry machines using existing conventional washing machine technology, with modifications to introduce the re-usable polymer beads into the wash.

Xeros ​was the first UK manufacturing company to float this year.

It will be joined next month by Doncaster-based Polypipe.