LDC’s Fever-Tree shares fizzing after IPO

Shares in the LDC-backed company shot up as trading began Friday

Drinks company Fever-Tree, which supplies premium carbonated mixers for spirits, has begun trading on AIM following the successful pricing of the company’s IPO earlier this week.

Fever-Tree, which is partly owned by LDC, the buyout arm of UK-based Lloyds Bank, had an initial market capitalisation of £154.4 million at the placing price, which in the first few hours of trading on Friday shot up to £195.91 million, or 170 pence per share.

Following the listing, which will raise gross proceeds of around £93.3 million, 60.4 percent of the company is publicly traded, according to an LDC statement. LDC acquired a minority stake in Fever-Tree in March 2013 in a deal valuing the company at £48 million. It will retain a 10.4 percent stake in the company, and Fever-Tree’s directors and senior management will retain around 25.2 percent of the issued share capital.

LDC was not immediately available for further comment at press time.

Fever-Tree, founded in 2005 by Charles Rolls and Tim Warrillow, recorded average annual revenue growth of 54 percent between 2009 and 2013. Its products are available in more than 50 countries, and 70 percent of Fever-Tree’s revenues are derived from exports.

The capital raised through the IPO will allow Fever-Tree to continue its international expansion and capitalise further on the multibillion pound global spirit and mixer market, LDC said.

Edward Hayter, investment director at LDC, said the IPO was “absolutely the right move for the business” and would provide the right platform from which Fever-Tree could “accelerate its overseas expansion”.

This is LDC’s ninth exit of the year. In June the firm sold its stake in Metronet, a provider of wired and wireless internet connectivity based in Manchester, netting a 4x return. In July LDC exited pharmaceutical manufacturer Penn Pharmaceuticals, selling the firm to a trade buyer for £127 million and reaping a 3x return.