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UK companies cool IPO plans as investor nervousness grows

Several UK companies have halted plans to go public in the public markets as investors signal greater reluctance as fears of a winter lockdown and inflationary cost pressures mount.

Hawksmoor, the London-based steak chain, has put its proposed IPO on hold, in part because of the wider hospitality industry uncertainty caused by labor shortages and supply chain disruptions. PureGym, the budget fitness company, is also rethinking its intention to include a list, said people aware of its plans.

Marley, a major UK roof tile supplier, said Tuesday that it was going public, which will bring the company to around $ 500 million. The online marketplace Fruugo has also put IPO plans on hold.

Hawksmoor’s founder Will Beckett said the company had cut refinancing talks, including through an IPO, as he wanted to focus on rebuilding the business after the pandemic and reopening new restaurants, including the first in New York and open up.

He said there had been great interest from a number of potential cornerstones and trading was above 2019 levels, but cited “the instability of the sector as a whole”. The chain had worked on the plans with Berenberg.

Will Beckett, founder of London-based steak chain Hawksmoor, said he wanted to focus on rebuilding the business after the pandemic © Charlie Bibby / FT

The number of companies going public in the UK in the first three quarters of this year was the highest since 2014, bringing in 13.7 billion. Shares in trucker payment company Eurowag fell sharply after its IPO last week.

Companies, particularly in the hospitality sector, are also facing increasing pressure from staff shortages with many EU workers leaving during the pandemic and post-Brexit, while costs are rising due to supply chain disruptions and transport costs.

But despite the fluctuating investor sentiment, other companies are pushing their stock market offers.

Hostmore, owner of the American diner chain Fridays, announced details of its plans to list in London’s main market in a prospectus on Friday.

The group – known as TGI Fridays until last year – will break away from its parent company, private equity firm Electra, and will be valued at around £ 275 million next month.

Robert Cook, former CEO of Virgin Active, who took over Fridays in 2019, said the company worked “tirelessly” to keep its workforce up and secure its key meat and energy bills.

Since Cook’s arrival, the 35-year-old has diversified into supplying home-made products, launching the 63rd + 1st cocktail bar brand.

Hostmore also plans to buy and grow young restaurant businesses in need of capital.

It intends to be listed on November 2nd, three weeks after Tortilla, another casual dining chain, entered London’s Aim with a valuation of around £ 70 million. The British branch of the fast food chain Burger King, which is owned by the private equity firm Bridgepoint, has announced that it will be listed in London this spring.

Graeme Smith, managing director of consulting firm AlixPartners, said that this year “always” [IPOs] was gone in late summer, early autumn was the sweet spot ”.

“People think [that as] we’re getting a little closer to winter, we might have problems with further spikes in cases, ”he added.

Russ Mold, Investment Director at AJ Bell said, “If the FTSE 100 is trading at an 18-month high, you would have expected new entrants to find it easy to make friends and raise capital, but it doesn’t seem like that right way to be case. ”

Mold said this was “due in part to the poor performance of some high profile deals over the past 12 months and perhaps a comment on the quality of some of the deals that were closed”.

Additional coverage from Harry Dempsey

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