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Elior aims for £617m IPO listing

17 April 2014 by
Elior aims for £617m IPO listing

French foodservice firm Elior has announced its plans to raise between €700m and €750m (£576m and £617m) through an initial public offering (IPO) later this year.

The caterer, the third largest in Europe after Compass Group and Sodexo, could be valued at more than €4b (£3.3b) following the flotation on Euronext Paris, which is expected to take place around the middle of June.

The cash raised from the IPO will be used to drive down Elior's net debt from €2.2b (£1.8b), as it was reported to be at its September 2013 year-end, according to the Times. It will also cut its leverage from five times it underlying earnings to 3.25 times.

As well as raising new money, the company's shareholders plan to sell off between 30% and 35% of their holdings in a secondary offer.

Elior was put on the market last year by private equity firm Charterhouse Capital Partners, which took the company private in €2.6b (£2.1b) deal in 2006 and is the majority shareholder with 62.3%. Chequers Capital owns 7.8%, co-founder Robert Zolade has 24.7%, while the rest is predominantly owned by the board and around 150 of its top managers.

The sale, which was being managed by Rothschild Bank, HSBC and Credit Agricole, was temporarily put on hold last March as the company looked to complete an acquisition in the US.

Offers came in from BC Partners, which was working with CVC Capital Partners, in addition to Cinven, Axa Private Equity and a Canadian fund. Blackstone and Clayton, Dubilier and Rice had also considered bidding.

But the offers failed to meet the expectation of around €4b (£2.3b), which Elior's chief financial officer Olivier Dubois put down to unfavourable "macro economic conditions" last year.

While Dubois would not say what the company would be valued at in the IPO, he did say that better market conditions meant that it was likely to be "a bit more" than the €4b target in last year's auction.

Founded in 1991, Elior operates in 13 countries. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be about €450m (£370m), up from €424m (£349m) last year, while revenues look likely to reach €5.2b (£4.3b).

In comparison, Compass Group amassed revenues of £17.6b (€21.3) last year, but Elior aims to use to the IPO to help it grow through acquisition as well as organically. Expansion in the US is a priority for the business, according to Dubois.

Elior's business in France accounts for more than half of the company's income (53%), while its British operations make up between 3% and 4%.

Elior sale on hold for US acquisition >>

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