Barclays Private Equity (BPE), the midmarket buyout arm of the UK’s Barclays Bank, has exited its investment in IT and communications staffing business SThree through a flotation.
Yesterday SThree listed on the main market of the London Stock Exchange in an IPO valuing the company at a market cap of £276 million (€406 million; $475 million). Its stock closed its first day of trading at 199 per share.
BPE invested £50 million in the company in 1999, before syndicating half of its equity to 3i, Gresham Private Equity and Parallel Ventures Managers Ltd. The investment was used to buy out a number of minority shareholders as a precursor to a possible IPO, and to pay cash out to the founding shareholders, Simon Arber and Bill Bottriell.
The private equity backers intended to prepare the company for a listing through adjustments to its board, budgetary process and corporate governance. However, this process took longer than expected due to the slump in the IT business after the tech crash.
The IPO raised approximately £100 million for the company’s shareholders, with Arber and Bottriell said to have received a combined £50 million. Dominic Geer, the director at BPE who led the investment, told PEO that the firm has made approximately 1.8 times its original investment: “It’s not a stellar return, but given that it was an IT investment made in 1999 we’re pretty happy with it.”
The proceeds of the IPO have all been distributed to shareholders rather than the company. Geer argued that the company still stood to benefit indirectly: “It’s good for the company to have the higher profile of a listed business, which will help it to establish relationships. Shares are also key for recruiting, retaining and incentivizing sales consultants.”