By James Davey
LONDON, Feb 7 (Reuters) - British online domestic appliancesretailer AO plans to list its shares on the London StockExchange in March, joining a rush of retail flotations andproviding a big payday for Chief Executive John Roberts whofounded the business in 2000.
The company will offer new shares to raise gross proceeds ofabout 60 million pounds ($98 million) and offer existing sharesto be sold by the current owners.
Selling shareholders will include some of the firm'sdirectors, including Roberts - the largest shareholder with astake of about 40 percent - as well as senior management andprivate investors.
Roberts, 40, said he would dispose of a minority of hisholding. "This is not about a John Roberts exit, I will be thebiggest shareholder on the other side of the IPO," he toldReuters.
AO expects at least a quarter of its share capital to befloated in the sale.
Roberts declined to say what valuation AO was shooting for.The Financial Times reported last month that AO was aiming for avaluation of 1-1.2 billion pounds. The top end of that rangewould put it on a multiple of about three times annual sales.
Independent retail analyst Nick Bubb pointed out DixonsRetail, Britain's No. 1 electricals retailer whichsells appliances through its Currys chain and online and is morethan 10 times the size of AO in terms of total sales, has amarket capitalisation of 1.6 billion pounds.
AO plans to expand its product range, including a move intotelevisions, and will evaluate expansion in Europe, initially inGermany.
It said it was well placed to benefit from further growth inthe UK online market for domestic appliances, which marketresearcher OC&C forecasts will grow at a compound annual rate of11 percent from 2013 to 2016.
RETAIL RUSH
The listing of AO is one of many expected in Britain'sretail sector in 2014. Russian hypermarket chain Lenta andnewsagent and convenience store McColl's have both announcedintentions to float in recent weeks.
Poundland, Pets at Home, Fat Face and House of Fraser arealso expected to come to market later this year, seeking tocapitalise from the UK's gradually improving economy.
Roberts said AO stood out from the crowd because it hadnever had any private equity involvement, was debt free and hada growth story to tell.
"When you look at the pipeline of IPOs that are comingthrough a lot are re-heated private equity deals, or peopleneeding to do an IPO to refinance or restructure their balancesheets," he said.
AO has recruited Brian McBride, chairman of online fashionretailer ASOS, who is also a former managing directorof Amazon in the UK, as its senior independentnon-executive director.
AO, based in Bolton, north-west England, sells about 4,000products from over 30 appliance brands, installs, removes andrecycles old appliances.
It has a 24 percent share of the UK online market for majordomestic appliances, such as fridges, freezers and ovens, makingit the largest player in that market.
In the nine months to Dec. 31 2013 AO's sales rose 43percent to 281 million pounds and it made an operating profit of4.7 million pounds.
AO employs just over 1,000 workers and, according toRoberts, has an obsessive focus on customer service. He said ithas two guiding principles for staff: "One is, treat thecustomer how you would treat your own grandmother. The other is,if you have to tell your mum at the end of the day what you'vedone, would she be proud of the decision that you made?"
