McBride flotation aims to raise £180m

BY JOHN SHEPHERD

The difficult waters of the new issues market will be braved this summer by McBride, the leading maker in Europe of private label household and personal care products. The company hopes to raise between £160m and £180m from a placing and open offer of shares.

If the flotation succeeds, McBride will sport an initial stock market value of around £350m. Proceeds from the flotation will mainly be used to redeem preference shares and pack-back some mezzanine and senior debts, leaving the group with about £70m of borrowings.

Mike Handley, the managing director, who fronted a £275m management buy- in two years ago of what was the consumer products division of BP Nutrition, said yesterday: "While the news issues market has been difficult, we believe investors will back this.

"Private label household and personal care products have established a secure and developing share of the grocery retail market in recent years. Flotation will support the further development of our private-label activities in our existing and in new geographical markets."

He also said that McBride was not being press-ganged into a flotation by its shareholders - Legal & General Ventures and Lehman Brothers collectively own more than 50 per cent.

The big two investors will stay involved with McBride, and it looks as if neither will sell many shares when the flotation details are announced in the next couple of months. "They [investors] won't all be selling what they've got," Mr Handley said.

A further 10 per cent of the company is owned by 115 managers, including Mr Handley who has a 3 per cent stake. "I will keep most of that stake," he said. He said that up to two-thirds of the enlarged share capital is expected to be held by new investors.

McBride's sales and profits performances have reflected the consumers' growing liking for own label products. Group turnover, of which half is in the UK and more than 40 per cent in France, Italy and Belgium, rose by 25 per cent in the three years to June 1994 and profits by 50 per cent. Sales in 1993/94 amounted to £409m, generating operating profits of £34.9m. The group sells to the leading UK and French grocery chains.

Mr Handley said the flotation would enable the group to make more acquisitions, following the recent purchases of Longthorne Laboratories, a private label personal care business, and the private label textile washing powder business of Albright & Wilson in the UK and Spain.

"I think there will be opportunities. We look at acquisitions, and keep a weather eye on what is available," he added.

There is, he said, still plenty of growth for McBride to go for in the UK because private label household and personal products had so far only carved out a 20 per cent share of the market against the 35 per cent claimed by some food products.

Most of Europe has still to experience the growth in private label products. A report last month by Kleinwort Benson, the broking house, predicts that the "greatest opportunity" for progress in the private label market is for household goods. The report also said that retailers across Europe are beginning to develop private label ranges.