Reykjavik / IS. (bkg) Island’s Bakkavör Group, a leading provider of fresh prepared food, announces its intention to proceed with an initial public offering (the «IPO» or the «Offer»). Bakkavor intends to apply for admission of its Shares to the premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange’s main market for listed securities (together, «Admission»). Bakkavor expects that Admission will occur in November 2017.
- Bakkavor is the leading provider in the large and fast-growing United Kingdom fresh prepared food («FPF») market and has a growing international presence in the United States and China.
- Bakkavor is the number one producer by market share in the UK of the four FPF product categories of Meals, Salads, Desserts and Pizza + Bread. The Group had a 30 percent share of the UK FPF market by revenue in 2016, 3.8 times that of the nearest competitor. The UK FPF market is expected to grow at a CAGR of approximately 5 percent in the four years to the end of 2019, driven by a number of factors, most notably the growing demand from consumers for high-quality, fresh, healthy and convenient food.1
- Bakkavor’s customers include some of the UK’s leading grocery retailers, which sell the Group’s products to consumers under their respective brands including Tesco, Marks + Spencer, Sainsbury’s and Waitrose. These four retailers together accounted for 70 percent of the UK FPF market in 2016 and Bakkavor had a 38 percent market share of their FPF sales.1
- Bakkavor’s International segment operates in the US and China. As these markets are not as well developed as the UK FPF market, Bakkavor seeks to have a transformative influence on their continued development.
- Bakkavor’s target markets in these countries are forecast to grow at a CAGR of approximately 9 percent (US) and 10 percent (China) between 2016 – 2019.1
- Bakkavor was founded in 1986 and has its headquarters in London. As at FY 2016, Bakkavor had a total of approximately 19’000 employees. The Group operates 26 factories in the UK, three in the US (plus one under construction) and eight in China (plus one under construction).
- Bakkavor has a strong track record of profitable growth and cash flow generation.
- FY 16 Revenue: 1’763.6 million GBP (3.1 percent CAGR FY 14-FY 16 on a 52-week basis)
- FY 16 Adjusted Ebitda2: 146.4 million GBP (13.7 percent CAGR FY 14-FY 16)
- FY 16 Adjusted Ebitda margin3: 8.3 percent (140 basis points increase FY 14-FY 16)
- FY 14-FY 16 average Cash Flow Conversion4: 85 percent
- FY 16 ROIC: 11.6 percent5
- Bakkavor saw continued financial momentum in H1 17.
- H1 17 Revenue: 903.3 million GBP (5.7 percent growth vs H1 16)
- H1 17 Adjusted Ebitda2: 77.7 million GBP (8.1 percent growth vs H1 16)
- 1 17 Adjusted Ebitda margin3: 8.6 percent (20 basis points increase vs H1 16)
All notes are set out at the end of this document on www.bakkavor.is.
- Bakkavor intends to apply for its Shares to be admitted to listing on the premium listing segment of the Official List and admitted to trading on the main market of the London Stock Exchange. It is expected that Admission will take place in early November 2017 and that, following Admission, the Company will be eligible for inclusion in the FTSE UK indices.
- The Offer will comprise a primary issue of new Shares by the Company to raise gross proceeds of approximately 100 million GBP (net proceeds of approximately 90 million GBP) and the sale of part of the Shares held by Baupost (41.0 percent shareholder) and the founders, Agust and Lydur Gudmundsson (59.0 percent shareholders) (the «Founders», and together with Baupost the «Selling Shareholders»). The Directors believe that the offer will enable the Group to further invest in the business; enable the Group to reduce its current leverage; and provide a partial realisation of the investment in the Group by the Selling Shareholders.
- Immediately following Admission, the Company intends to have a free float of at least 25 percent of the issued share capital. The Founders and Baupost will remain significant shareholders in the Group.
Full details of the Offer will be included in the Prospectus expected to be published in due course.
- In conjunction with the intention to float, the Company announces that prior to Admission, Simon Burke, currently an Independent Non-executive Director, will be appointed as Independent Non-executive Chairman. The Company’s current Non-executive Chairman, Lydur Gudmundsson, will remain on the Board as a Non-executive Director. Peter Gates, CFO, will be appointed to the Board as an Executive Director prior to Admission.
- The Company also announces the further strengthening of the Board with the appointment of Sue Clark as Independent Non-executive Director, effective prior to Admission. Sue has considerable experience, having been formerly Managing Director of SABMiller Europe BV from 2012 to 2016. She is currently a non-executive director on the boards of Akzo Nobel and Britvic plc, where she also chairs the Remuneration Committee.
Agust Gudmundsson, CEO of Bakkavor: «We are delighted to be listing Bakkavor at a very exciting time for the Group. Our passion for making the best tasting fresh prepared food, underpinned by our expertise and our focus on innovation, has made us the clear leader in an attractive and fast-growing market.
We have long-established relationships with the UK’s leading food retailers and our quality products are core in their efforts to gain greater exposure in the exciting fresh convenience sector. We have a long track record of delivering sustainable growth in both revenue and profits and there is considerable momentum right across the Group. Our experienced management team has the ability and ambition to ensure we can further strengthen our position in the UK while accelerating our international growth ambitions.
This IPO will enable us to continue to invest to ensure we create value for all investors and stakeholders, and bring more great tasting food to our customers. I am hugely proud of what has been achieved to date at Bakkavor and look forward to leading the business through the years to come».
Simon Burke, Chairman-elect of Bakkavor: «Over the past 30 years Bakkavor has grown to become the clear leader in the UK market for fresh prepared foods and a vital partner for retailers and food service companies. Through that time the business has retained its entrepreneurial edge, while putting in place a hugely experienced management team with strength in depth across manufacturing, supply chain and innovation.
I have been impressed by the significant growth that Bakkavor has delivered as a private company. Now, with solid foundations in place for the next stage of the Company’s development, Bakkavor is excellently positioned to continue to build on its success and capitalise on the growth opportunities ahead. The Board and I look forward to working with Agust and the rest of the management team to ensure the delivery of long-term returns for all investors».