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Supreme plc, a leading manufacturer, supplier and brand owner of fast-moving consumer products, has announced that its entire share capital was admitted to AIM on 1 February 2021 with a free float of 43.2%, making it the first AIM initial public offering (IPO) of 2021. The decision to go public is one that has been considered by the company for some time and the successful listing follows the company’s announcement in 2018 that it had officially decided to postpone its admission ‘due to market conditions’.
The IPO consisted of a placing comprising an offer to institutional investors of both new and existing shares priced at 134 pence per share and was ‘comfortably oversubscribed’, raising gross proceeds of £67.5 million. The primary selling shareholder was chief executive officer, Sandeep (Sandy) Singh Chadha, who owned 100% of shares before offering just under half, maintaining a 56.76% stake in the company following admission.
International law firm, Bird & Bird, advised Joh. Berenberg Gossler & Co KG, Sole Global Coordinator and Broker and Grant Thornton LLP, Nominated Adviser to Supreme. The team was led by partner Adam Carling (Corporate, London) with support from Freddie Spearman and Sharon O’Donnell (Corporate, London) and regulatory specialists Sally Shorthose (Partner, IP, London) and Pieter Erasmus (IP, London).
Supreme originally announced its intention to float on 23 April 2018, highlighting the strength of its lighting, battery and vaping lines. The transaction was followed up by an announcement on 4 May 2018, that the company had decided to postpone the IPO ‘due to market conditions’, despite having long term distribution relationships with Panasonic since 1993, Duracell since 1994, and Energizer since 1998 as well as an eleven year exclusive licensing relationship with JCB and a seven year relationship with Philips. Nothing further was heard until 27 January 2021 when it published a placing price announcement.
Since the initial plans to list were announced, Supreme has made the best out of the turbulent conditions as a consequence of the pandemic and capitalised on a strong business plan to cater to current consumer demand by increasing its product offering. The company now boasts a range of sports nutrition and wellness products, including sports nutrition powders and wellness supplements, which has contributed to the success of the business given the increased consumer focus on this sector in the past few years. The company has also developed its brand image by cultivating its own well-known vaping product, 88Vape. This category represented approximately 34% of revenue for the six-month period ended 30 September 2020 and revenues grew by 108% between 31 March 2019 and 31 March 2020 for the sports nutrition & wellness category.
Supreme declared in its admission document that the Group’s online offering is a key focus. It stated that ‘The Group has recently accelerated the shift to online sales through its own business-to-business online platform, Supremeoffers.co.uk, where the Group provides goods to approximately 1,000 online business accounts. In addition, Supreme has increasingly been selling products direct to consumers through its own online websites such as 88vape.com and ledhut.co.uk where it has approximately 50,000 active accounts. The Group also sells a number of products through Amazon and eBay international selling programmes.’
Our Market Tracker trend update: IPOs in Q3 2020 noted an increased focus on digital and healthcare services companies choosing to pursue a listing and attracting positive investor attention towards the end of 2020, which appeared to be accelerated by the COVID-19 pandemic. 2021 has started on a similar note, with recent IPOs from Dr. Martens plc (admitted on 3 February 2021) and Moonpig Group plc (admission to trading expected to commence on 5 February 2021), both of which have attributed recent business success to their strong online presence. For more information, see: Moonpig confirms its intention to float.
Supreme also stated that it is gaining increased penetration into supermarkets including Asda and Iceland. This shows savvy entrepreneurialism from the company, as YouGov reported in June 2020 that supermarkets had greatly benefited from the pandemic with increased consumer spending in this sector and plans for further online shopping.
The over-subscription of shares should come as no surprise to Supreme, which is hitting all of the areas that are driving IPO activity and is proving to have a stable business plan. In response to the IPO, Chadha commented: ‘To have received such significant interest from investors is a real endorsement of our business model, the Supreme team, and our strategy. We are delighted to be listing on AIM and look forward to benefiting from the advantages that our listing will bring, as we execute on our exciting growth trajectory with the support of our new investors.’
The IPO Trend Report data also showed an initial spike in IPO activity from Q3 of last year after activity almost ground to a halt in Q1 and Q2, most likely due to the uncertainties of Brexit and the pandemic. 2021 seems to be solidifying this trend and last week has proven to be exemplary, with four companies announcing their intention to float on the Main Market of the London Stock Exchange (LSE), including Auction Topco Limited, Digital 9 Infrastructure plc, MGC Pharma and NextEnergy Renewables Limited. Notably, these companies are based within the energy, technology and healthcare sectors, industries which have overall been resilient throughout the pandemic, and are tipped to exceed in 2021. Market Tracker will report further on both developments during 2020 and predictions for 2021 in its upcoming Equity Capital Markets trend report, to be published next month.
Adam Carling, Partner at law firm Bird & Bird, who advised broker Berenberg on the transaction commented:
'The market is more receptive now than it was when Supreme first considered floating on the public markets, and this, combined with its expansion into new areas and an increase in profits have created favourable conditions for the company’s IPO.
There is a bullish expectation surrounding AIM IPOs in 2021, particularly from our broker clients, although Bird & Bird has also received a number of pitch requests for IPO mandates this year already, which is encouraging. The relatively low number of IPOs for the past few years has resulted in some pent-up demand, so it is unsurprising that as market conditions improve we will see an increase in IPO activity. That said, the financial markets in London have generally held up well throughout the pandemic. We saw a substantial amount of funds being raised overall in 2020, which under the circumstances can be considered a success story.'
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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