United Products IPO: global Britain in action?

Following Snap’s rollicking start on the NYSE attention turns to the UK on Monday and the, admittedly more low-key, debut of UP Global Sourcing Holdings plc (UPGS) on the FTSE. The Oldham-based firm goes public on the AIM market on Monday in one of the largest IPOs so far this year in the UK.

Despite Brexit concerns it looks like the market for deals is relatively undimmed. In the wake of last June’s referendum Pure Gym and TI Fluid Systems ditched plans to float and Biffa was forced to cut its price. The market looks a bit healthier now.

Shares look set to rise on the open with the order book said to be substantially oversubscribed and backed by broad range of institutional investors including Blackrock, Henderson, Schroders, M&G, Miton, Ennismore. As of lunch on Friday the shares were set to open around 148p, up from an original list price of 128p.

Revenue growth has been stellar, with underlying earnings before nasties for the five months to the end of last year up by 77.7% from the same period a year before.

Growth prospects also seem solid with a large footprint in UK retail and a focus on discounters, the big four supermarkets and online through Amazon. It also supplies the likes of Argos, Shop Direct, Halfords, Homebase and others. A licence to sell Russell Hobbs products is important but it also has brands like Beldray, Intempo, Salter under its roof.

International exposure also looks like a big positive and with a weak pound to boot, likely to improve. The firm sells in 38 countries with international sales representing 26% of revenue and it has an office in China. An embodiment of the post-Brexit ‘global Britain’ demanded by Theresa May perhaps, the firm might be a sign of things to come as the UK economy pivots to a different type of exporting. Plans to play on its British heritage to sell into the USA, India, China and Australia look promising if it can execute. The government ought to support this tack but while trade deals with these countries have been talked up they could take a few years to materialise.

Neil Wilson

Senior Market Analyst

ETX Capital