Swann’s SSP set for IPO

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London - Unfazed by a volatile IPO market, retail industry veteran Kate Swann plans to raise around 500 million pounds ($840 million) through a London listing of food and drink company SSP in the next few weeks.

Swann, who has spent 25 years in British retailing and joined SSP as chief executive last year, expects to draw on her 10 years running WH Smith to improve the fortunes of a company that operates food and drink outlets in airports and railway stations in 29 countries.

With core earnings forecast for this year at around 165 million pounds, and on an average sector share price to earnings multiple, SSP could have a stock market valuation of between 1.6 billion and 2 billion pounds including debt.

“There is always volatility and I think investors can see through that to what is fundamentally a strong business,” Swann told Reuters. “If you have a strong business you don't have to worry about that. We're in big, attractive markets.”

After a rush of listings in London earlier this year, the IPO market has turned more volatile in recent weeks, with two flotations pulled and several trading below their IPO price.

The announcement by SSP follows the listing of Europe's third-largest catering group, Elior, which returned to the Paris stock market this month after an eight-year absence.

Potential investors in SSP will be hoping Swann can repeat her performance at Smiths, the British books, newspaper and stationery retailer, where she cut costs, boosted profit margins and expanded into the travel market.

Spun out of the world's biggest catering firm Compass in 2006, SSP is now 94-percent owned by the Swedish private equity firm EQT. It serves around 1 million customers a day with some 30,000 staff and boasts such brands as Caffe Ritazza and Upper Crust.

EQT bought its holding in SSP for 1.8 billion pounds in 2006.

While SSP plans to use the IPO proceeds to pay down debt, Swann said the group had strong growth prospects, with more people willing to fly as the global economy recovers and with plenty of scope for improvement in its finances.

“We expect to continue to grow our space and places like Asia Pacific, the Middle East, America will be high on our list,” she said.

Swann also thinks the business can be made more efficient. In the six months to the end of March, SSP recorded a 13 percent rise in underlying core earnings on constant currency terms, as profit margins improved.

The company said the stock offering would enable existing shareholders including EQT to reduce some of their stakes, although they will agree to certain initial lock-ups. - Reuters

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