Doughty Hanson set to list RHM this year

It looks likely that the UK foods group will be floating sooner than originally predicted with a target valuation of circa. £1.5bn.

Rank Hovis McDougall, the UK foods group, is said to be being readied for flotation by its owner, buyout specialist Doughty Hanson. Reports suggest that the company could be worth as much as £1.5bn.


Although no mandate has yet been awarded, a number of investment banks are presently in discussion with the company and reports suggest that a listing could take place as soon as September of this year.


Doughty Hanson paid £1.139bn for RHM in 1999 when it acquired it from downsizing conglomerate Tomkins. Tomkins had bought the group itself in 1989.


RHM owns a number of leading food brands, including Hovis bread and Mr. Kiplings cakes and in 2000 had turnover of £1.7bn.


In 2001 RHM, via an SPV, issued a £650m asset-backed bond to help refinance the acquisition by Doughty Hanson, distinctive not only for being backed by the entire business but also because of the perceived value of its brands. These, as well as the robust cashflows food sector companies enjoy, made the ABS a success.


It is also likely that these same factors will help make the planned flotation far easier than for some other companies. News today that private equity firm Duke Street is also planning to list DIY retailing group Focus suggest that many expect the appetite for new issues in the public equity markets to return this year and that old economy businesses with familiar stories and strong balance sheets will succeed with a listing.