Snack supplier Kitwave is to float on the London Stock Exchange in early May, Shares understands. The Tyne & Wear-based company was founded in 1988 and is a UK wholesaler, selling sweets, crisps, ice cream, drinks and tobacco from the likes of Cadbury’s, Mars, Nestle and Kellogg’s.
Figures for the year to April 2019 show 7.4% growth in sales to £366.6 million and 16.4% growth in pre-tax profit to £3.5 million. A year ago, Kitwave changed its financial year end to October and the 2020 results have yet to be published, according to data filed on Companies House.
Trading is likely to have been disrupted by the pandemic, but Kitwave’s expected stock market listing coincides with the relaxing of lockdown restrictions, making this an obvious reopening play.
Growth has been helped by acquisitions including the 2019 purchase of Hull-based Alpine Foods and the 2017 purchase of Wakefield-based alcohol wholesaler HB Clark. Kitwave is expected to raise new money as part of the stock market listing to help pay for further acquisitions.
‘The underlying market is growing 1% to 3% but via acquisition they see growth of 6% to 10%,’ says Oliver Brown, fund manager at MFM UK Primary Opportunities. ‘As a low margin business, there is a risk they buy a company that proves to be sub-par. Generally, they know the target market companies pretty well which limits the potential for this. Nevertheless, they must be disciplined with the ratings they are prepared to pay.’
Kitwave is expected to be valued in the region of £110 million to £120 million, putting it on a price to earnings ratio of approximately 11-times and with a 5% dividend yield.
Private equity group NVM used to have a stake in Kitwave but sold to US investors Pricoa Capital and Allstate Investments in 2016, making three times its original investment.
UPDATE 7 MAY 2021: Kitwave has now confirmed plans to list, targeting admission on 24 May.
