Ibstock builds IPO hopes on UK brick shortage

Ibstock has unveiled intentions for a £1bn stock market listing less than one year after it was taken private in a £414m deal

One of the country’s largest and oldest brick makers has unveiled plans for a £1bn stock market flotation, valuing it at twice the price it was bought for less than a year ago. Ibstock said it intends to raise £100m through the listing, which will go towards refinancing the debt that private equity firm Bain put in place to seal a £414m takeover last December.
The US buyout group paid £295m in cash to buy the brick maker from CRH, the FTSE 100 building materials group, which has since refocused its business towards cement with a €6.5bn takeover of Tarmac Lafarge.
Around 25pc of Ibstock’s shares, held by Bain and members of the company’s senior management team, will be sold in the listing, meaning a swift windfall for the private equity firm.
Ibstock has a 40pc share of Britain’s clay brick market and is a major player in the northeast and midwest of America through its Glen-Gery subsidiary. "With UK brick demand now exceeding current manufacturing capacity, a significant opportunity has been created for a UK manufacturer to expand capacity," said Wayne Sheppard, chief executive.
The prices of clay bricks increased by 6.7pc in the 12 months to July 2015 as demand significantly outstripped supply.
A £1bn flotation is a significant turning point for Ibstock which in 2008 and 2009 suffered a 40pc slump in volumes which led it to mothball a plant and put 35pc of its workforce on reduced pay to avoid hundreds of redundancies.
However, the group has since capitalised on the housing market’s revival.
The combination of structural demand growth, supply-side constraints and government support have enabled Ibstock to establish strong momentum within its business, with a significant acceleration in revenue and adjusted EBITDA growth achieved in the last two years.
Wayne Sheppard, chief executive of Ibstock
Ibstock has pointed to its rapid earnings growth over the past three years as justification for its £1bn price-tag. Profits have swelled from £29m in 2012 to £87m in 2015, while revenues have jumped from £278m to £395m over the same period.
Since 2013 UK house builders have had to source more expensive bricks from the Continent as demand at home has risen, while supplies have fallen.
The company recently won planning permission for a new factory in Leicester which will boost production by 100 million bricks a year.
Ibstock Brick, named after the Leicestershire town where the company was founded115-years-ago, started life as a coal mining company, using quarrying clay to make bricks. Over the following 30 years, it exited coal mining to focus exclusively and brick manufacturing.
Separately, Equiniti, the financial outsourcing group which handled the controversial privatisation of the Royal Mail, is also planning a £1bn stock listing this week.
Private equity firm Advent has hired Barclays, Goldman Sachs, Credit Suisse and Liberum for the flotation, said Sky News which first reported the plans.

Source The Telegraph

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