Pets at Home set for £1.5bn market flotation

Pets at Home
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Pets at Home has unveiled plans for a stock market flotation expected to value Britain’s biggest pet shop group at around £1.5bn.

The announcement adds to the current bout of float fever after a raft of companies, including discount retailer Poundland, launched share offers worth billions in total.

Around 500 members of staff own 10 per cent of the pet retail business, which has over 30 stores in Yorkshire.

This will translate into an average of £240,000 each, although the holdings of senior executives will be much bigger than those of shop workers.

Pets at Home is seeking to cash in on an improving outlook for consumer spending and the nation’s love of pets.

The firm is mainly owned by US private equity group KKR, which bought it from Bridgepoint four years ago for £995m in one of the North’s biggest buyouts of recent years.

KKR is looking to raise about £275m from the sale of new shares to pay down debt. Unlike Poundland, the float will include an offer to retail investors.

Pets at Home plans to more than double the number of its veterinary surgeries and in-store grooming salons in a bid to raise its 12 per cent share of the UK’s £5.4bn-a-year pet care and retail market.

In December 2012, the group bought York-based Ride-away, a multi-channel equestrian business, to boost its specialist online offer.

The pet care market grew by 2.6 per cent between 2008 and 2012, considerably faster than the broader UK retail market and underscoring pet owners’ attachment to their animals even during difficult economic times.

The flotation is one of a number expected in the retail sector this year as the economy recovers from the long and deep recession.

Newsagent and convenience store McColl’s, online domestic appliances retailer AO and discount firm Poundland have all said they plan to list soon.

Fat Face, House of Fraser, Boohoo.com and B&M are also expected to come to market later this year. Independent retail analyst Nick Bubb said: “Pets at Home will be seen as an important test of investor appetite for private equity owned retailers, as it has been through a couple of owners in recent years, so the question is how much has been left in the tank by KKR?”

The move comes 23 years after founder Anthony Preston opened the first Pets at Home store in Chester. Mr Preston still has a small stake in the group.

The group now has 369 stores in the UK as well as 246 small animal veterinary surgeries through joint ventures under the Companion Care and Vets4Pets brands.

It also has 116 in-store Groom Room salons and employs about 6,000 staff, 93 per cent of whom are pet owners.

The company said like-for-like revenues grew by 2.4 per cent and underlying earnings by 11.1 per cent to £87m in the 40 weeks to January 2.

This is expected to reach £110.2m in the year to the end of March.

Chief executive Nick Wood said: “This market remains highly fragmented, which offers us significant scope for further gains in share.”

He added that Pets at Home’s five largest rivals have a combined total of just 225 stores.

He outlined plans for the firm to grow to over 500 UK stores, more than 700 veterinary practices and in excess of 300 groom rooms in the medium term.

On Tuesday, Poundland announced details of a float that will value it at around £750m.

ros.snowdon@ypn.co.uk