Card Factory IPO prices at lower range

UK-based Charterhouse, which bought the business for £350m in 2010, will retain a 41.3% stake in the business.

Card Factory, a UK-based retailer that sells greeting cards which is owned by Charterhouse Capital Partners, has set its price to list on the London Stock Exchange at 225 pence per share, giving the company a market capitalisation of£766.6 million (€939.6 million, $1.28 billion), according to a statement.

The shares priced at the bottom of the 225 pence to 240 pence range, which was set earlier, according to a source familiar with the matter. At 12.45 BST, shares were trading at 205 pence, nearly 9 percent lower. The shares will list on 20 May 2014.

Card Factory will receive £90 million of gross proceeds from the IPO, the majority of which will be used to reduce the group's indebtedness and provide access to lower cost of financing, according to an earlier statement. The IPO cash together with existing cash resources and the proceeds of circa £180 million from new senior loans will repay all amounts outstanding.

Following the IPO, the directors and members of Card Factory will hold 19.2 per cent, while Charterhouse will hold 41.3 per cent, assuming no exercise of the over-allotment option.

Card Factory was established in 1997 as a one-store discount retailer and has been developed, through organic growth and add-on acquisitions, into a value retailer. The business has more than 700 stores in the UK.

“[Card Factory] is a well-invested and cash generative business with a strong business model, creating an excellent platform for further profitable growth,” Richard Hayes, chief executive officer of Card Factory, said in the statement.

The business sold over 285 million single cards in the financial year ended 31 January 2014. In that year, the Group achieved revenue growth of 9 percent to £326.9 million and underlying EBITDA growth of 9.2 percent to £80.4 million, compared to £73.6 million in 2013.

Charterhouse acquired the business for £350 million from LDC in April 2010. Charterhouse, which owned an approximate 60 percent stake, acquired the company using it Charterhouse Capital Partners IX No.1, Charterhouse Capital Partners IX LP No.2, and Charterhouse Capital Partners IX Co-Investment LP.

Last month Charterhouse also floated Saga, a UK-based travel and insurance group which it owns together with Permira and CVC Capital Partners. Charterhouse will be keen to return cash to investors as it is gearing up to raise between approximately €3 billion to €4 billion for Charterhouse Capital Partners X later this year, sources familiar with the matter told PEI recently.