CityBeat: What price a PLC?
Glynn Davis looks at the often-awkward relationship between UK retailers and the City
What retailer in their right mind would want PLC status today? It’s a question that an increasing number of retailers are asking themselves.
Along with the obvious kudos, the argument for gaining a listing had always been that it provided the ability to raise funds for such things as expansion.
However, times have changed and along with the hassle of continuous media intrusion there is the issue that since many retail companies – especially the smaller players – have been so undervalued in recent years, it would have been folly for them to raise funds.
This has resulted in the private arena becoming the fashionable playground for retailers who simply want to get on with running a business without any outside interference. And helping them fund this lifestyle are the venture capitalists (VCs) who have also shown that private ownership is an ideal place for troubled companies to be taken when they need radical surgery that would prove too painful for shareholders to stomach.
The likes of Bhs, Arcadia and Halfords are all examples of under-performing retailers that were taken private, with surgery performed behind closed doors. Once recovered, they have proved significantly fitter beasts.
However, that the recovered Halfords is once again returning to the stock market – admittedly with a much higher valuation than when it was bought out of Boots – highlights that there is another use of gaining PLC status. This is the one that gives the likes of VC owners the opportunity to cash in their chips.
And even the anti-quoted-company Philip Green has found a use for a stock market listing. Such are the amounts involved in buying M&S that he would have to use an equity component to partly fund the takeover and so he would – God forbid – end up running M&S as a listed company.
So, while it might not be flavour of the month for many retail leaders, PLC status does continue to have a place greasing the wheels of the retail sector.
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Glynn Davis was previously a fund manager in the City, and has since become a business journalist specialising in the retail sector. He contributes to a range of publications including national newspapers and the specialist trade press.
