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Biffa kicks off flotation and cuts share price

2000 Biffa Municipal vehicle

Biffa’s share price for its stock market listing has been set well below what was expected by analysts when the float was announced in September.

Trading in the waste manager is expected to begin on 20 October when more than 118,001,417 shares will be on offer at 180p per share. A further 27,803,742 shares will go to existing shareholders and senior management.

Biffa says the total gross proceeds will be approximately £262m.

The share price equates to a market capitalisation of £450m, significantly less than the £1bn expected by City analysts in September when a price between 220p and 270p was mooted.

On 12 October, Sky News’ city editor Mark Kleinman reported that Biffa had been forced to cut the price to avoid scrapping its flotation plans.

Ian Wakelin, Biffa chief executive, said the return to the London Stock Exchange was a significant milestone for the company and a testament to the hard work of all his staff.

“This listing is an endorsement of Biffa’s business model, strategy, track record and prospects,” he said. “The company is well placed to exploit structural changes in the UK waste market, leveraging its diversified and integrated operations right across the country.

”Biffa will continue its disciplined approach to capital allocation and to capturing further operational efficiencies by optimising its systems and processes.”

Earlier this month, fitness chain Pure Gym abandoned a London stock market flotation while vehicle parts manufacturer TI Fluid Systems postponed its float. Both cited market volatility.

Mark Wilson, partner, Catalyst Corporate Finance

”Given the recent cancellations of sponsor-backed intiial public offerings it is good to see Biffa get theirs away. Whilst pricing is down from initial guidance, the shareholders cannot be unhappy that the £1.80 share price will give the business an enterprise value of c£750m based on pro forma figures, which is still higher than the valuation levels achieved during the sale process earlier this year.”

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