Servelec set for £140m market float

The initial public offering of shares in Sheffield software company Servelec is expected to create a quoted company with a market capitalisation of up to £140m.

This would represent a near seven-times return on investment for its Singapore-based owner.

It will be the first Yorkshire flotation since summer 2012, when WANdisco, another Sheffield software company, listed on the junior stock market.

Servelec will be wanting to emulate WANdisco’s soaraway success; its offer to the City was three times oversubscribed.

The £40m-turnover company hopes its IPO will help take advantage of opportunities in its markets, which are going through major upheaval. The company serves the national healthcare and blue-chip energy and utilities sectors.

Both are experiencing significant structural and regulatory changes.

Alan Stubbs, chief executive, said: “The present ownership structure as part of a larger group places a constraint on the management team to capitalise on these exciting opportunities.

“An IPO is the natural next stage of development for Servelec, providing the appropriate platform to drive growth both organically and through acquisition.”

Yorkshire law firm Walker Morris is advising on the main market IPO.

Richard Naish, a corporate partner, said: “The deal reinforces the increased confidence we have been seeing in the market for IPOs.”

Year-to-date figures from the LSE show that the FTSE 250 is up by more than 20 per cent. The main market has seen 23 IPOs so far in 2013, compared to just 10 at the same time last year.

Mr Naish said that the Servelec IPO is one of the few to be handled outside of London, which reinforces his firm’s strong capital markets heritage.

He added: “We look forward with confidence to playing our part in helping other clients with IPOs and secondary offerings to grow and expand their businesses.”

Mr Naish is expecting to see more IPOs from Yorkshire companies in the coming year.

He said the combination of pension funds looking for better returns and a rise in asset values means that the markets are “well and truly open”.

Walker Morris is a long-standing adviser to Servelec and advised on its 3i-backed management buyout in 1995, its £18.6m sale to CSE Global in 2000 and subsequent acquisitions.

CSE Global is a global technology conglomerate listed on the Singapore Stock Exchange and specialises in automation, telecommunication, healthcare and environmental industries.

Mr Stubbs was appointed group chief executive of the business in 2011.

Servelec, founded in 1977, has its origins in the design and manufacture of control systems for the Sheffield steel indus- try.

The company prides itself on its engineering roots and invests heavily in developing new intellectual property. It employs 500 people.

The healthcare division designs, develops and implements electronic patient record and administration software and is a market leader in the mental health and community care sectors.

Servelec is hoping to win contracts supplying software to NHS trusts as the Government winds down the failed National Programme for IT.

The automation division provides mission-critical control systems to large blue-chip companies operating in the oil and gas, nuclear power, water, utilities and broadcast industries.

Richard Last, chairman, said the group has a very promising future as a listed company and will have the opportunity and means to capitalise on many growth opportunities.

Investec is acting as sponsor, adviser, bookrunner and broker.