After announcing that it aimed to achieve a valuation of around £850 million through a flotation, a cross-border payments company moved closer to listing on the London Stock Exchange.
CAB Payments announced on Tuesday its intention to sell its shares at 335p each and to hope to be listed on the Stock Exchange on July 6.
If the deal is successful, it will give a boost to London’s stock exchange, which has been suffering from a lack of listings. This is fueling concerns that Britain is losing its appeal as a destination for companies to list.
CAB has taken a unique approach to its initial public offering. Typically, companies set a range of prices for their shares. This is then used as the basis for the so-called “bookbuilding” process. Investors submit bids on stock to determine the final deal size and price. Instead of starting with a range, London-based CAB begins its bookbuilding process with a predetermined price. The company is believed to have done this as investors had already shown an interest in its shares at that level.
CAB would have a market cap of £851.4 Million if it were to sell at 335p per share. This is big enough for the FTSE 250 Index.
BhairavTrivedi, CAB chief executive, described this as “a compelling offer” and added: “We are pleased with investor engagement to date and we are excited to continue meeting the institutional and retail investing community over the coming week.”
The payment group said that it would offer investors at least 40% of its shares. This is much more than the minimum of 10% required by City regulations.
CAB has announced that it will float in this month. It was originally expected to aim for an initial valuation between £800,000,000 and £1 Billion. The company’s origins are in Crown Agents Bank which was established in 1833 to handle payments for British colonies.
Since late 2021, IPOs have been down around the globe. The Russian invasion of Ukraine in addition to the soaring inflation rates in the UK and US has put investors on edge. This volatility is fueling the financial markets. London’s flotation markets are under particular scrutiny.
Ministers and City advisors are worried that rival financial centers such as New York and Amsterdam, are increasingly attracting flotations from Britain. Softbank, a Japanese conglomerate decided to list Arm in the US this year, one of the leading chip designers in the world. This decision was seen by many as a blow to London.
WE Soda in London, a company that produces soda ash and is owned by Turgay Ciner, a Turkish billionaire had planned to go public in London in this month. It would have been Britain’s largest flotation of the year. Alasdair Warrren, the boss of the group, explained that they chose London over New York as WE Soda would be a “big fish in a modest-sized pond”.
The company abandoned its listing, blaming the decision on “extreme caution of investors in London”. Warren has hinted in recent months that the company may look at New York as a possible IPO location.