On the boil: ProCook is looking to become a household name
This year is shaping up to be a bumper one for stock market flotations. More than 80 companies have already listed their shares so far, raising around £14billion between them. By December, the total number of firms will be even higher, with proceeds topping £15billion.
Many of these shares are only offered to individual investors once they have floated – a travesty of stock market justice, as Wealth has highlighted in recent months.
But it seems as if some businesses are beginning to do things differently, offering their shares to investors large and small.
Life Science Reit
Life Science Reit is one such business. The company is seeking to raise £300million via a £1 a share offer and it will be the first London-listed company to focus exclusively on life science properties, from laboratories to manufacturing sites and specially configured offices.
Once science was primarily associated with men in white coats and Bunsen burners. Today, drug development is as much about artificial intelligence and digital data gathering as it is about test tubes and experiments. That means those working in the industry, from academic professors to multinational businesses, need high-tech sites with huge digital capacity so they can conduct research and create tomorrow’s new medicines.
Many of the best and brightest firms are in and around Oxford, Cambridge and London. These cities are home to four of the top ten research universities in the world so attract clever scientists, fast-growing businesses and investors looking for good opportunities. Yet UK life science firms have far less space than their US counterparts. Oxford and Cambridge have five million square feet of purpose-built laboratories between them. Boston, home of Harvard University, has 30million square feet. Shortage of supply has created growing demand, with firms striving to find top-quality space so they can conduct research, develop new drugs and produce them here in the UK, rather than overseas.
Life Science REIT aims to redress the balance between supply and demand, while benefiting from the generous rents that sector specialists are prepared to pay.
The group has a pipeline of deals valued at £445million, with six transactions, worth £305million, already at an advanced stage. Manager Simon Farnsworth therefore expects to spend the proceeds of the flotation within six months, allowing the firm to start paying dividends next summer, targeting an annual yield of 4 per cent in 2022, rising to 5 per cent the follow ing year. Sites to be acquired include a company whose research contributed to the development of Covid-19 vaccines and a gene therapy business analysing DNA to help cure Alzheimer’s disease.
These sites are all within the life science ‘Golden Triangle’ of St Pancras in London, Oxford and Cambridge, where demand is most acute. Farnsworth, a career property man, is highly selective about the deals that he pursues. But he is also ambitious, hoping to build Life Science REIT into a £1billion business within the next year, coming back to shareholders for more funds as he spots new opportunities.
Shares are on sale now via intermediaries such as Equiniti, AJ Bell and Redmayne Bentley. The application deadline is November 15 with trading set to start four days later.
Midas verdict: Britain has long been at the forefront of scientific and medical research but the pandemic has shown how vital this sector is and how much support it needs. Life Science REIT will provide operators with the space to do their best work and the shares should deliver attractive returns as well. At £1, the shares are a buy.
To be traded on: AIM Ticker: LABS Contact: lifesciencereit.co.uk
Cookware line has hot prospects
Daniel and Michael O’Neill were in their teens when they left home to seek their fortune, but would meet their mother Peggy every Sunday for lunch. A family of keen cooks, they each tried to outdo the other with the quality of their cuisine.
In 1996, their hobby turned into a business when the family launched a mail order firm, Professional Cookware. Shops followed and, in 2005, the firm began to sell online.
The financial crisis sent it into administration but Daniel O’Neill bought it back, cut the number of shops to 13, invested in the website and relaunched it as ProCook. Growth has been steady ever since.
Revenues rose from about £8million in 2008 to more than £53million in the year to April 2021, with sales expected to be even higher this year. Profits have soared as well, reaching £8.5million last year.
Having started with saucepans, the firm sells a wide range of essentials, from knives to dinner sets to chopping boards, all under the ProCook brand. There are more than 50 shops, openings due before Christmas and a thriving website.
Now O’Neill is keen to take ProCook a stage further, via a flotation which should value the business at up to £250million. Shares will be priced early next week and available to retail investors via AJ Bell, Hargreaves Lansdown and other intermediaries. ProCook differs from firms such as Tefal and Le Creuset as products are sold directly to consumers, either online or in its stores. This allows O’Neill to offer similar goods to his competitors at cheaper prices, while still making a healthy profit.
The 56-year-old vowed after the 2008 crisis never to rely on bank debt so ProCook has a robust balance sheet and intends to pay attractive dividends, while delivering long-term share price growth.
O’Neill and his family are likely to sell between 25 per cent and 40 per cent of their business through the flotation, so they will be sitting on a fortune if all goes according to plan. But he has no intention of retiring. Still an enthusiast in the kitchen, he will remain at the helm of ProCook, driving growth here and in Europe.
Midas verdict: Interest in cooking surged in lockdown and studies suggest that the trend is here to stay. O’Neill is intent on profiting from the UK’s newfound domesticity and turn ProCook into a household name. When the shares are priced this week, they will be worth a close look.
To be traded on: Main market Ticker: Proc Contact: procookgroup.co.uk or 0330 100 1010
Rooftop solar panels offer high return
Atrato Onsite Energy
Supermarket Income REIT listed on the stock market at £1 in July 2017 and was recommended by Midas in March 2020 at £1.06. Today, the shares are £1.19.
The company buys supermarket properties and leases them back to store owners such as Tesco.
It has made sustained progress since floating, with investment decisions led by experienced investment management firm Atrato Capital.
Now Atrato is back with a new venture. Atrato Onsite Energy will instal solar panels on the roofs of commercial buildings – including supermarkets – and sign long-term, clean energy contracts with the owners of these properties.
The initiative will allow businesses to secure around 30 per cent of their electricity needs from solar power. Costs are cheaper and more predictable than buying from the grid and businesses can display their green credentials too.
Atrato Onsite Energy will publish its prospectus this week, with shares on offer via Primary Bid, as well as intermediaries such as Hargreaves Lansdown.
The board, led by Good Energy founder Juliet Davenport, hopes to raise £150million to use within a year. Davenport is also targeting a 5 per cent dividend yield from 2022, expected to increase in subsequent years.
Midas verdict: Atrato Onsite Energy should help customers to become greener and generate sustainable income for shareholders too. The group also boasts an all-female board, a first in the world of London stock market flotations. Atrato has shown it can make money for investors. At £1, the stock is worth a punt.
To be traded on: Main market Ticker: ROOF Contact: atratoroof or 020 3790 8087