Hg Capital, the London-headquartered European mid-market investor, stands to receive £82 million in cash following the IPO of Raymarine on the London Stock Exchange.
Shares in the marine electronics product maker priced today at 152 pence, valuing the business at £125.5 million (€180 million; $240 million). Trading is expected to commence on December 6.
Hg invested £33 million of equity in a management buyout of the business from Raytheon in 2001. Prior to the IPO, the firm had a 70 percent equity interest in the company. Following the listing, Hg will retain a 27 percent stake in the company.
Hg’s remaining holding in Raymarine will be subject to a statutory lock-up period until September 2005. However Nick Turner, the Hg director who led the investment in the business, indicated the firm was likely to continue to hold Raymarine stock until significantly after the lock-up expires.
Commenting on the success of the IPO, Turner said he was very pleased with how Raymarine had developed after HG invested in the business. Key to the company’s success was the decision, taken in 2002, to allow a significant push on R&D spending to hurt short-term profitability in order to boost new product development, he said. A number of management changes also proved beneficial, Turner added.
Including Hg’s unrealised holding in Raymarine, the IPO gives the firm a 4x return on investment and an IRR of approximately 50 percent, Turner said.
Independent corporate finance house Hawkpoint Partners acted as financial adviser to Raymarine and sponsored the IPO.