DFS keeps own counsel on reports £1bn flotation is in store

Private equity owner Advent International is planning to cash 
in on a City appetite for floats 
that recently saw estate agents Foxtons put on more than £100m in value within hours of its 
shares becoming available to investors, according to The Sunday Times.

Increasing signs of economic prosperity coupled with a buoyant stock market are convincing a growing number of privately-owned firms to consider raising money via share sales.

Businesses whose fortunes are linked to the resurgent housing market, buoyed by the Government’s Help to Buy scheme, have led the charge for flotations.

The Foxtons float was a recent notable example while earlier in the year the public offering of shares in Countrywide, the biggest estate agency chain in the UK, saw it valued at more than £800m.

Property website Zoopla is reported to be considering flotation plans valuing it at more than £1bn.

Also on the horizon for City investors is next month’s privatisation of Royal Mail, valued at about £3bn.

The Sunday Times reported that DFS will appoint advisers to begin work on float preparations within the next few weeks, with the business expected to be valued at between £800m and £1bn.

However, sources told the Yorkshire Post that management, led by chief executive Ian Filby, have “no immediate plans” to IPO.

Advent bought the Doncaster-based chain three years ago in a deal worth £590m.

Founded by Yorkshire entrepreneur Graham Kirkham in 1969, it has 74 stores across the UK, mostly in out-of-town retail parks, and employs more than 2,600 people.

On its website, Advent says: “The business operates in a sector which has been difficult for some retailers, but the company’s relative size, own-manufacturing capabilities and reputation as market leader has allowed it to perform well and gain market share since the downturn in 2008.”

Recent figures suggest the market for sofas is looking up, with big-ticket furniture and flooring sales recently enjoying their best month in more than three years, according to the British Retail Consortium.

Advent declined to comment.

DFS has substantially increased its UK manufacturing operations since it went private. More than half of its sofas are now made in Britain.

The company employs 800 people in UK manufacturing jobs.

Speaking in the summer, Mr Filby said UK manufacturing has made itself more competitive in recent years.

DFS reported total sales of £481.8m in the nine months to April 27.