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LONDON (Alliance News) - Online health and beauty retailer The Hut Group Ltd said Tuesday it has ruled out a stock market flotation this year, the latest sign that the recent surge in London initial public offerings may have peaked.
The Hut Group, founded by Chief Executive Matthew Moulding in 2004, operates 15 individually branded websites across product categories. It said it has no plans for an IPO this year, although it did not rule out the possibility over the next few years.
The Financial Times had previously reported that the fast-growing retailer was considering a GBP350 million float earlier this year, and in an article Tuesday reported that The Hut Group had pulled the IPO due to unsustainable technology valuations and volatile share prices.
A Hut Group spokesperson said Tuesday that it never set a plan for an IPO this year. However, any such move has now been ruled out for 2014.
The London IPO market recovered strongly in 2013 and so far this year, after several years of depressed activity in the wake of the financial crisis. The recovery in the market for new issues came as stock markets around the world also recovered, with some indexes pushing to new all-time highs this year.
However, equity markets wavered in early April, as technology and biotechnology stocks were sold off, first in the US, and then in Europe. That sell-off was prompted by fears those sectors had become overvalued in the wake of high profile IPOs in the US in recent months, notably those of Twitter Inc and King Digital Entertainment PLC.
In London, high-profile names such as Just Eat PLC, Pets at Home Group PLC and Poundland Group PLC have already floated this year and were well received as retailers, in particular, led the rush to list.
However, in recent weeks, retailers including Card Factory PLC and AO World PLC have seen their share price dip below the level at which they were offered, while energy technology company PassivSystems was joined last Thursday by retailer Fat Face Group Ltd in postponing a proposed IPO. Both companies cited weak conditions in the UK equity market as the main reason for backing out.
Online domestic appliances retailer AO World's shares are currently trading nearly 13% lower than its IPO price.
Fashion retailer Fat Face had originally been looking to raise up to GBP110 million in gross proceeds from the initial public offering, which was expected to value the company at up to GBP400 million.
According to one person familiar with the IPO market, the pipeline for the second half of 2014 is noticeably quieter than the first, amidst tightening investor attitude. Some companies currently planning to float in the second quarter may even push their IPOs into the second half as a result. With the retail sector highly represented in the wave of IPOs so far this year, there could be a shift to companies in sectors that haven't been as prevalent.
Meanwhile, Lloyds Banking Group PLC Tuesday confirmed its plans to go ahead with its IPO of TSB Banking Group PLC on the London Stock Exchange next month, while budget hotel firm easyHotel PLC, one of the portfolio of companies owned by billionaire entrepreneur Stelios Haji-Ioannou, said last week that it intends to list on London's AIM market.
EasyHotel, which currently has a portfolio of 20 hotels, said it plans to raise up to GBP60 million in an IPO, money it will use to grow the business further in London and Europe and pursue franchise opportunities elsewhere. The IPO would value the company at around GBP100 million, with the company's stock market debut expected to happen in June, or not later than early July.
EasyHotel is one of a number of other companies in Stelios' easyGroup. Others include easyCar, easyGym, easyProperty and easyPizza.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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