LONDON: Brakes Group, the UK’s biggest food distributor, has begun preparing for a stock market listing in London that could see it valued at up to £2.5bn.
Sky News has learnt that Bain Capital, the private equity group which bought Brakes in 2007, has appointed investment bankers at Lazard to advise on a public share offering.
A listing, which would not take place until next year, would be likely to catapult Brakes straight into the FTSE-250 share index.
Employing more than 10,000 people, the company operates in a number of European markets, including France and Sweden.
It describes itself as “a one-stop shop for caterers” and counts some of the UK’s biggest pub operators and restaurant chains among its clients.
Results for 2014 disclosed that earnings before interest, tax, depreciation and amortisation rose 7% to just over £150m on turnover of £3.1bn.
One analyst said that, based on those figures, £2.5bn would be a “rich” valuation, although the company is expected to show further profit growth this year.
Last November, Brakes announced that, subject to Competition and Markets Authority approval, it would launch a joint venture to create a new fresh food company called Fresh Direct.
Under Bain’s ownership, Brakes has made a number of other acquisitions and launched a specialist bread range, La Boulangerie, in 2009.
Brakes is now run by Ken McMeikan, a well-known figure from his time at the helm of Greggs, the bakery chain.
It is expected to have to recruit a new chairman before it goes public, however, since the incumbent is Philip Jansen, who is now at the helm of another flotation candidate, the payments company Worldpay.
Mr Jansen ran Brakes before moving to Worldpay, which is expected to go straight into the FTSE-100 when it lists as soon as this year.
If it does float, the listing of Brakes will be the latest in a string of private equity-backed companies to take advantage of strong equity markets by selling new shares to investors.
Lazard has built a reputation for advising on many of these deals, including the caterer SSP and the discount retailer B&M.
It is conceivable that a buyer will emerge instead for Brakes, with trade players and other financial sponsors expected to examine possible offers.
