British Car Auctions revs up float plans

Last year, British Car Auctions sold 600,000 cars, the highest number since it was founded

7:46AM BST 06 Oct 2014

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Britain's largest seller of second-hand vehicles is motoring towards a stock market flotation that will value the business at around £1.2bn.

British Car Auctions, which sells more than 900,000 cars a year and bought 120,000 vehicles last year through its webuyanycar brand, is hoping to raise around £200m via the initial public offering.

British Car Auctions (BCA) said that it will use the float proceeds to repay debt and other borrowings.

The Blackbushe-based company, which is owned by private equity firm Clayton Dubilier & Rice, will join luxury shoemaker Jimmy Choo and challenger banks Aldermore and Virgin Money in their hopes of becoming a listed company by the start of next month.

It is expected that CDR will sell a portion of its stake in the listing, meaning the number of shares in publicly traded hands will likely be higher than the 25pc required by UK listing rules.

John Olsen, the chief executive of BCA, said: "The IPO of BCA is a natural development for our business and will provide us with the right ownership base to continue to deliver on our strategic ambition. BCA comes to the market with an excellent track record of growth in revenues, earnings and strong cash flow generation."

The group's revenues have increase by 7pc over the last three years to £442.3m while its adjusted earnings before interest, tax, depreciation and amortisation have grown 27pc to £62.5m, including the acquisition of webuyanycar in August 2013.

The company will publish detailed financial results for the year in its upcoming shareholder prospectus.

The listing of BCA will mean it is the first time Mr Olsen and finance director Simon Hosking have run a publicly listed company, although Mr Olsen has been at the car group for 24 years.

Fred Kindle, the chairman of BCA and a Clayton Dubilier & Rice partner, said: "BCA is a truly impressive international business, driven by a committed, dedicated, entrepreneurial management team and backed by supportive shareholders. I have been impressed by the significant growth that BCA has delivered as a private company, but there is much more to come."

Clayton Dubilier & Rice are likely to sell out entirely in the years to come, which means that the board composition will inevitably change with Mr Kindle leaving the board to reflect the change in ownership.

However, Mr Olsen said that he would be "very surprised" for that to happen within a year as the private equity firm supports the company's growth potential.

JP Morgan, UBS, HSC, Jefferies, and Numis are running the listing process with Rothschild and Linklaters acting as advisers to BCA.

BCA was bought by Clayton Dubilier & Rice in 2010 for around £400m. Its value is believed to have shot up after a surge in second-hand car sales and an increase in the value of used vehicles.

At the company's first auction in 1946, when it traded as Southern Counties Car Auctions, it sold 14 cars and generated proceeds of £2,300. It now sells more than 12,000 vehicles every week at physical auctions and over the internet.