FURNITURE retailer DFS is to raise over £100m in a return to the stock market that will value the sofa giant at around £1bn.
The Doncaster-based group said the cash will help fund international expansion and reduce its debts.
DFS, which is owned by private equity firm Advent International, has a quarter share of Britain’s £3bn upholstered furniture market with 105 stores in the UK, Ireland and the Netherlands.
DFS said the offer, which will raise £105m, will be extended to retail buyers so loyal customers get a chance to be involved.
DFS’s CEO Ian Filby said the group believes it is particularly important that employees get a chance to become shareholders, allowing them to buy shares at the offer price.
Hargreaves Lansdown head of equities Richard Hunter said: “With the UK economy on a positive trajectory it’s good to see a company with a strong retail brand floating on the London Stock Exchange.
“The inclusion of a retail element is also a welcome addition and recognition of the company’s customers.”
Advent, which has been involved in the business since 2010, intends to sell down some of its stake and directors will also sell some shares.
However, Mr Filby said that management will remain strongly invested in the company post IPO.
The move comes just after smaller rival ScS floated on the London market last month valuing it at £70m. DFS plans to complete its float next month.
“Over the last 18 months we’ve returned to pre-credit crunch levels of growth. We’ve had 12 months of really encouraging growth,” said Mr Filby.
“It’s great news. It’s a vote of confidence to continuing the strategy.
“This is a really effective way to open up capital markets.”
DFS competes against rivals such as Furniture Village and Sofaworks.
It reported annual gross sales of £874.8m in 2014, turning in a pre-tax profit of £85.2m.
In a trading update yesterday the group said gross sales in the half year to January 31 rose nine per cent, not including extra sales from recent acquisitions Sofa Workshop and Dwell.
It added that order intake since Boxing Day has also been positive compared with last year.
Mr Filby said the group is confident that it has “excellent prospects” for the current year and for long-term profitable growth as one of the UK’s best known brands and a major British manufacturer.
The chain has opened 27 UK stores over the past four years and plans to roll out three to five new UK shops a year.
It opened its first Dutch store last November.
“Our vision is to take DFS from being a great British business to a world class business,” said Mr Filby.
He added there was significant opportunity to further increase the group’s scale in the UK, as well as target greater online sales.
DFS is reaping the rewards of introducing double shifts at its three sites to meet customer sales guarantees.
It has factories in Doncaster, Alfreton and Long Eaton, employing 900 people and producing around a third of the group’s products.
Together with other British suppliers, around 50 per cent of DFS products are now made in Britain.
As part of the float plan, the group has appointed Julie Southern, former chief commercial officer of Virgin Atlantic, as a non-executive director and chair of the audit committee.
This follows the appointment of Luke Mayhew, former John Lewis managing director, and Gwyn Burr, who has held senior executive roles at Asda and Sainsbury’s, as independent non-executive directors.
Mr Filby said Advent International has been a great owner of the business.