Blog

‘Moneysupermarket.com to float’

July 18, 2007 at 11:01 am

Moneysupermarket.com is to float on the London Stock Exchange, possibly as early as July 31st, earning its founder and current owner, Simon Nixon, up to £127 million. Mr Nixon, a 39-year-old university dropout, will sell 60.3 million shares at between 170p and 210p, depending on the demand for them. The offer and placing is being handled by investment bank Credit Suisse, who initially advised Moneysupermarket.com to only make shares available to institutions, denying private investors access to the initial public offering (IPO). Mr Nixon commented, “Our advisers said, ‘Don’t do a retail offering, it’s a pain.’ We said, ‘No, we want to do one. We want to be a consumer champion.'”

The prospectus will be available from Credit Suisse sometime next week. If you would like to apply for shares, you should contact a retail stockbroker such as Redmayne-Bentley.

If the shares floated at the top of the price range, the company would be valued at just over £1 billion, making it the largest IPO made available to private investors since last year’s offering of Qinetiq, the formerly state-owned defence contractor. The current market conditions of increased volatility and illiquidity have discouraged many large companies from listing. Only last month the public offer of £2.5 billion property portfolio Vector Hospitality, which includes Malmaison Hotels, was cancelled, due to various considerations, lack of demand from consumers being one.

However, the flotation of Moneysupermarket.com is expected to be successful. The company has grown at a phenomenal rate since Simon Nixon and Duncan Cameron founded the site in 1998 with only £4,000 in start up capital. It began by comparing various bank accounts, allowing consumers to assess accounts on their relative merits, and choose the best one to suit them. Once the visitor clicks through to open an account, Moneysupermarket.com receives a referral fee. They also make money from the advertisements on the site. The company now has 25 different comparison channels, including banking, credit cards, insurance, broadband and the subsidiary Travelsupermarket.com. Last year it had a turnover of £104.5 million from 64 million visitors.

The founders fell out in a disagreement over strategy, which resulted in a lengthy battle for control of the company. Mr Nixon bought £162 million of Mr Cameron’s shares in June, which has led to this flotation. Some of the proceeds of the offering will be used to pay off the debt incurred by Mr Nixon’s buy-out of Mr Cameron.

There is some concern as to what the remaining cash will be spent on, as well the possibility that Mr Nixon is ‘cashing in’. Richard Hunter at Hargreaves Lansdown Stockbrokers explained, “The important question will be whether Nixon will stick around and how the business might change flotation.”

Mr Nixon has attempted to allay these fears by agreeing to a three year ‘lock-in’ period, during which he cannot sell any of his remaining £500 million worth of shares. He also elaborated on future plans for the business, including the possibility of acquisitions, “We believe we can continue growing this business at breakneck speed… we are only scratching the surface. Only 15 per cent of people have bought a financial product online.”

Posted in Uncategorized |

Leave a Reply