Alarm IPO will give buyout barons peace of mind
07/10/2025 12:04
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. By Jennifer Johnson LONDON, Oct 7 (Reuters Breakingviews) - Verisure effectively sells its customers the ability to sleep easy at night. The home security firm's forthcoming initial public offering should do the same for buyout barons mulling how to get rid of trillions of stuck assets. The group, majority‑owned by the private equity firm Hellman & Friedman, aims to raise over 3 billion euros via a float on the Nasdaq Sweden this week. Its IPO discount looks modest, which is good news for other hopefuls. The Stockholm-based company's core business, providing alarms and monitoring systems to households and small firms, appears stable. Its adjusted operating profit grew at a rate of around 20% annually between 2022 and 2024, while Verisure claims its average customer lifetime is an impressive 15 years. Would-be investors seem enthused. Bloomberg reported on Monday that the float was likely to price at around 13.25 euros per share, which would be near the top end of its previously stated range of 12.25 euros to 13.50 euros apiece. That would value the business at around 18.5 billion euros ($21.6 billion), including just under 5 billion in net debt. Listed comparators are difficult to come by. But a person familiar with the matter told Breakingviews that investors have been looking at a cohort of European business-services firms, like Experian EXPN.L and Diploma. Serial acquirers in the Nordic region – such as Indutrade INDT.ST, Lagercrantz LAGRb.ST and Addtech ADDTb.ST – are also in the mix. The services players tend to trade at 19 to 21 times 12-month forward operating profit. The Nordic compounders, meanwhile, are generally valued in the low-to-mid 20s, on the same basis. Verisure's adjusted operating profit for the last 12 months was around 875 million euros. Assume 20% year-on-year growth, which is roughly in line with historic rates, and the implied forward 12-month number would be just under 1.1 billion euros. It follows that an 18.5 billion euro enterprise value would be equivalent to a multiple of 17.6, which imputes a minimal 12% discount relative to the rough 20-times midpoint rating for business-services peers. At first glance, that might not seem like anything to write home about. But IPO discounts are often much bigger, reaching 20% or more in the United States, for example. The takeaway is that buyout barons looking to float rock-solid assets should be able to do so without having to accept a massive markdown. It's particularly good news for chunky assets like TK Elevator, owned by Advent International and Cinven. Verisure's IPO should offer a sense of security to IPO wannabes as well as its customers. Follow Jennifer Johnson on Bluesky and LinkedIn. CONTEXT NEWS Home security specialist Verisure is due to float on Nasdaq Sweden on October 8 and aims to raise 3.1 billion euros in what could be one of Europe’s largest listings for years. The company said on September 29 that the final price in the offering will be set within a range of 12.25 to 13.50 euros per share. According to deal terms reported by Bloomberg on October 6, books were covered at multiple times the level of 13.25 and above – indicating a price near the top end of Verisure’s range. That would give the company a valuation of around 18.5 billion euros including debt. Verisure's peers have tended to trade around 20 times operating profit https://www.reuters.com/graphics/BRV-BRV/mypmxeoxgvr/chart.png (Editing by Liam Proud; Production by Streisand Neto) ((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))