Today’s £26m placing of the final private equity stake in Ashstead Technology (AT.) is worth a mention in dispatches. Ashstead, which rents out subsea equipment to the offshore oil and renewable energy industries, is not only a rare example of a successful recent IPO, but a flotation which was brought to market by private equity backers..
The temptation for private equity firms to gear up their companies ahead of an IPO and boost profits by stripping out the easiest cost savings before flotation, is why many investors tend to be suspicious of newly quoted companies coming out of a private equity stable.
However, Ashstead, brought to market by Buckthorn Partners, appears to be an exception. The company was floated at 162p in November 2021, raising £36m for its private equity backers and £15.5m of new equity for the company. Since then its private equity backers have raised another £105m through four placings at ever higher share prices – 200p, 260p, 310p and now 360p.
The latest placing was priced at a reasonably modest 7.2% discount on a share price that has risen strongly since the start of the year. The company is currently capitalised at just over £300m, or more than twice its £129m at the time of its flotation 18 months ago.
To date the company has consistently beaten market expectations, and said at the time of last week's announcement of its 2022 results that the board expects the outturn for the current year to be "materially ahead" of its previous expectations. Let's hope that it can continue to beat expectations now that its private equity backers have departed.
Investors will have a chance to quiz Ashstead's management at an InvestorMeet presentation tomorrow (Friday, May 12) at 11.0am
