Duke Street eyes Focus flotation

Duke Street, the UK private equity firm, is reported to be planning a flotation of Focus Group, the DIY chain, where it has a 50 per cent stake. According to Sunday’s The Business, the firm is presently selecting the investment banks to advise on the listing.
 
Later today [Monday],  Focus will report its results for 2001, which are expected to reveal a significant increase in both turnover and profit. Analysts estimate that the Group will be reporting earnings of around £170m on sales of £1.7bn. The Group has already revealed that it enjoyed strong sales growth of 10.5 per cent in Q3 of 2001. This has prompted estimates that the flotation could value the Group at least £1.2bn.
 
Duke Street bought Focus from UK retailer Boots in 1998 for £68m and then proceeded to buy and build by acquiring retailer Great Mills in September 2000 for £285m and then DIY chain Wickes for £290m in December 2000.
 
One obvious investment bank candidate to participate in the flotation is ING Barings who lead a £170m high yield issue for Focus last year that was used to refinance the Wickes acquisition. It is reported that three other investment banks are competing to win the mandate.
 
Focus is now the second largest DIY group in the UK by turnover, controlling circa. 14 per cent of this £11.5bn annual market. Top slot is occupied by B&Q, owned by retailing conglomerate Kingfisher, whilst third place goes to Permira owned Homebase. Focus is planning to add 10 stores to the existing 300 Focus Do-it-All chain and another 10 to the more building trade oriented Wickes chain which currently has 130 outlets.

The Business reports that Duke Street’s total investment in the group to date has been around £200m, meaning that a listing that hits the target valuation of £1.2bn will deliver a £600m total return to the firm.