Industry split on AJ Bell’s pricing range

Platform business to float with a market cap up to £675m

AJ Bell

AJ Bell has revealed the price range for its initial public offering (IPO) but commentators are split on whether the price is fair value.

In an trading update this morning, the firm said it has set a price between £1.54 and £1.66 per ordinary share, implying a market capitalisation of between £626m and £675m.

Darius McDermott managing director of FundCalibre said the “price range isn’t necessarily cheap”.

Still, he added: “It is a good company that has been growing strongly, in an industry that has a long-term structural growth story: more people are living longer in retirement and having to finance it themselves rather than relying on the government.

Elsewhere, Heather Hopkins managing director at Nextwealth said the price range seems “modest”.

“Given the valuations and share prices of Hargreaves Lansdown and Transact, I’d have expected a higher price range,” she said.

But she added “there is no harm in being cautious at this stage”. “They still have room for manoeuvre before the listing.”

The offer

As announced in an update last week, the IPO will comprise only existing shares being sold and a targeted offering will be available to institutional investors in the UK and customers of the investment platform.

In an update, AJ Bell said it would publish its prospectus with full details later today.

Once the full details are released, investors will be able to apply for shares until 5pm on 5 December 2018.

Final pricing is expected to be announced on or around 7 December 2018, with conditional dealings in the shares expected to commence on the London Stock Exchange at 8am on the same day.

Admission of AJ Bell’s shares and unconditional dealings are expected to commence on or around 12 December 2018.

The announcement has been expected for some time and is coming to market after a strong rise in equities and when valuations are still high, even after the recent sell-off, explained McDermott.

Hopkins added: “AJ Bell is a very well run business and has enjoyed strong growth on both the adviser platform (InvestCentre) and (YouInvest). They continue to innovate and re-invest in the business.

“They launched managed portfolios a couple of years ago and have invested heavily in the front end. They are a SIPP specialist and have benefited from the pension freedoms and should continue to benefit from assets shifting toward a SIPP wrapper through into decumulation.”

Lock in

As previously outlined, AJ Bell directors and other employees selling shares have agreed to a one year lock-in of 100% of their shares, following admission, falling to 50% for another year thereafter.

Invesco Perpetual and Seneca Investment Managers will also be subject to a 180 day lock-in period following the date of admission, in respect of their shareholdings at admission.

Discussing the announcement, Andy Bell (pictured), chief executive of AJ Bell, said: “There has been significant interest in our IPO which reflects the potential for expansion in our market, the strength of our business model and our track record of sustainable growth.

“The application period for the IPO is due to open later today and our customers will be able to apply for shares via our investment platform where they will find the prospectus to help inform their decision.”

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