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Poundland Seeks To Float For £750M

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http://www.theguardian.com/business/2014/feb/14/poundland-stock-market-flotation-ipo

Poundland is expected to confirm plans to float on the London stock market early next week. The low-price retailer, which has seen rapid growth during the UK's economic downturn, is expected to seek a total valuation of around £750m.

Poundland, which is chaired by former Tesco executive Andy Higginson, is the latest in a wave of as many as 15 retailers seeking to raise money on the public markets this year.

The convenience store operator McColl's and the online kitchen appliances retailer AO have already confirmed plans for initial public offerings alongside the Russian hypermarket Lenta.

Pets at Home is expected to reveal its plans in the near future, possibly next week, with a valuation of about £1.2bn.

Do they own property?

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750mn is really small valuation suspect the co is loaded with debt and has thin margins. A trip into Poundland and I think why did they and why did I bother?

This is not advice!

Edited by Ash4781

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a 2x sales multiple on a low margin fairly low growth business with no obvious IP, its crazy, I cant see it going for that. They may float just a few shares and then try and eek out their own holding over time. By way of history, Advent International (big private equity house) bought it in 2002, warburg pincus bought majority stake in 2010.

You cant say for certain, but these guys generally go for an IPO because its cheaper money, and no strategic buyer will pay them a premium for the business, which you could understand in this case as its just another pound shop at the end of the day.

edit - beg your pardon, sales were £350m in three months to December, so given seasonality, its probably a circa 0.7 -0.8 sales multiple, and probably a totally bonkers earnings multiple, and there will be plenty of debt in there.

Edited by worzel

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750mn is really small valuation suspect the co is loaded with debt and has thin margins. A trip into Poundland and I think why did they and why did I bother?

This is not advice!

But most people don't invest in shares, and if they do, they don't really understand, margin, P/E, cashflow etc. The housing market is a clear example! Also people put their money with fund managers - and they put their money in Ocado!

The world is a funny place.

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750mn is really small valuation suspect the co is loaded with debt and has thin margins. A trip into Poundland and I think why did they and why did I bother?

This is not advice!

Yep.

I go in occasionally. Its business is based on its customer not being innumerate.

You do have to be very careful.

I did buy a couple of packets of those breakfast bars as these were cheaper than Tesco.

However, when I got home I found the box had one less packet than Tesco's and each packet had one less biscuit.

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Yep.

I go in occasionally. Its business is based on its customer not being innumerate.

You do have to be very careful.

I did buy a couple of packets of those breakfast bars as these were cheaper than Tesco.

However, when I got home I found the box had one less packet than Tesco's and each packet had one less biscuit.

They are very cheap for certain things such as batteries. Also they sell USB phone charger leads for a quid. One thing I did notice is that they can process people much faster through tills than other shops since there is much less faffing around with change and almost noone pays by card (cant remember if they actually accept them TBH).

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They are very cheap for certain things such as batteries. Also they sell USB phone charger leads for a quid. One thing I did notice is that they can process people much faster through tills than other shops since there is much less faffing around with change and almost noone pays by card (cant remember if they actually accept them TBH).

In Poundworld cards have to be over certain amount, fiver or six quid I think.

Good for somethings, like HDMI and ethernet cables, and general tat. Even picked up some notebook coolers, but everything else is generally cheaper in the supermarkets or Wilko as they sell products especially cheapened to sell through their outlets.

Example is 'cuppa'teabags, now down to 74 bags a pack, which cost a quid. Sainsburys basic ;faretrade' tea bags 27p are far better.

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In Poundworld cards have to be over certain amount, fiver or six quid I think.

Good for somethings, like HDMI and ethernet cables, and general tat. Even picked up some notebook coolers, but everything else is generally cheaper in the supermarkets or Wilko as they sell products especially cheapened to sell through their outlets.

Example is 'cuppa'teabags, now down to 74 bags a pack, which cost a quid. Sainsburys basic ;faretrade' tea bags 27p are far better.

Wilkinsons is the absolute best store, they have everything ridiculously cheap.

Poundland is good for specifics: got this year's diary there (vs >£5 in WHSmiths), and they have one-offs that are great value (soem sunglasses - £40 online when I checked) which make it worth popping in on the offchance.

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why don't they have a banking arm as well? That's the best way to access cheap qe capital these days

You do realise that

1) most QE counterparties aren't banks

2) the counterparties that sell bonds to the BoE had to buy them first so already had the cash so post QE transaction are in the same state they were before buying the gilt except with a few bps profit from the BoE buying the gilt above market price (so as to push rates down)

Edited by terryturbojr

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You do realise that

1) most QE counterparties aren't banks

2) the counterparties that sell bonds to the BoE had to buy them first so already had the cash so post QE transaction are in the same state they were before buying the gilt except with a few bps profit from the BoE buying the gilt above market price (so as to push rates down)

1. The QE counterparties are the Primary Dealers. They're the world's biggest banks: Barclays, USB, HSBC, Nomura etc.

2. The Primary Dealers make a profit on their bond purchases, leverage it themselves via their affiliates or lend it out as margin to their biggest hedge fund customers. A few bps thus gets multiplied very quickly into the market.

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1. The QE counterparties are the Primary Dealers. They're the world's biggest banks: Barclays, USB, HSBC, Nomura etc.

2. The Primary Dealers make a profit on their bond purchases, leverage it themselves via their affiliates or lend it out as margin to their biggest hedge fund customers. A few bps thus gets multiplied very quickly into the market.

Sorry, yes your one is strictly true but that is only because they're the only people allowed to transact. For the most part they're acting in an agency capacity though. So the folks selling the bonds are not banks.

Not sure what you're saying in your second point. I'd imagine the way banks profit from qe for the most part is through the asset price bubbles the lower rates from it have created. This would far outweigh any bps they've picked up here and there either through agency or principal trading of the actual QE transactions.

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Sorry, yes your one is strictly true but that is only because they're the only people allowed to transact. For the most part they're acting in an agency capacity though. So the folks selling the bonds are not banks.

Not sure what you're saying in your second point. I'd imagine the way banks profit from qe for the most part is through the asset price bubbles the lower rates from it have created. This would far outweigh any bps they've picked up here and there either through agency or principal trading of the actual QE transactions.

I honestly don't know. Lower rates have certainly helped stabilise the asset side of the balance sheet but you can't have a bubble without leverage. Sovereign debt is the other factor, of course.

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I'm sure I ought to have something to say about all this but, I've lost interest in this sort of thing since my Madonna style reinvention as a hipster kitten.

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The finals came in at 1bn sales with underlying profits at 36.8mn. Market cap is around 840mn. Not sure what the earnings per share was. All that work for 36mn.

This is not advice.

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The growth potential is huge. I like the model which is highly scalable across EU.

Wouldn't buy IPO. Maybe would after sizeable fall.

Buy and hold.

This is not advice

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So we have a bullish view and and a bearish view!

We're all looking for the next ASOS which I remember was about £2 a share and got up to the dizzy heights of £70 a share!

I can only see one major competitor which could undercut them by 1p for every 100p in sales.

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The growth potential is huge. I like the model which is highly scalable across EU.

Wouldn't buy IPO. Maybe would after sizeable fall.

Buy and hold.

This is not advice

I don't like high-volume, low product cost, low-margin operations. The current success of these places - and have you seen all the similar competition - suggests to me wider retailing difficulties, and peaky retailing valuations. I wouldn't go a million klicks near any of their shares. Ferocious competition in this sector is coming; and wider retail.

Times 27.07.2014

Fame & Fortune. ... Steve Smith. The Poundland founder has become a Dragons' Den-style investor but still fears losing loose change.

Do you own a property? I have a large portfolio of buy-to-let properties - about 100 - from flats to office blocks to holiday lets. My own home is between Kidderminster and Bridgnorth. It is about 120 years old and I've spent three or four years refurbishing it. It cost £2.2m a decade ago, and has eight bedrooms and about 50 acres of land. We have llamas - they're cheaper than lawnmowers. We bought a four-bedroom villa in Cala d'Or, Mallorca, about six months ago. It was built six years ago, at the height of the credit crunch, when it was worth more than £1m. I paid £500,000. Prices in Mallorca have stopped falling and have even started going back up. That's one of the reasons I bought. For me, everything's an investment. We've also got a house in Kissimmee, Florida, that we bought four years ago for about £100,000. It had been repossessed by a bank, so it was also cheap. It is probably worth about £200,000 now.

What's been your most lucrative work?

It's got to be Poundland. I started it in December 1990 after borrowing £50,000 from my dad, Keith. Within 10 years we had a million customers, turned over £200m and employed 6,000 people. We sold the business for £50m. When it floated it was valued at more than £750m.

What's been your worst investment?

After selling Poundland, my dad and I invested in a business that wanted to create a £2 version. It was poorly managed and we ended up losing about £500,000.

Edited by Venger

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