Consolidator's chief sets out options for future growth.
see free trial analysis: Floating the Oval boat
Oval chief executive Phillip Hodson has said the company could float within three years as it seeks to grow its revenues beyond £200m.
The option of listing, mooted at an internal conference last week, followed the news that the broker had put its acquisition plans on hold for the summer.
Hodson dismissed suggestions that it was looking to replace long-term private equity backer, Caledonia, which owns 38% of the company, and reports that the business was looking to sell.
“We have got plenty of funds: 20m pounds in the bank, and a facility of three times that sum. We have to be careful for a period.
He said: “We have been looking to raise equity. We want to maintain our independence. Come 2010/11, one of the plays will be an [initial public offering]. The issue is how much funding do you want in debt, and how much in equity?”
Hodson said Oval’s business model positioned it well for a future listing. “We are not a consolidator. We are a mini-national. Our business is corporate. We have good management and good controls.”
Hodson attributed the pause in Oval’s shopping spree to inflated valuations and growing concerns over the sustainability of acquired businesses. He denied that a lack of funds had forced it to scale back.
“We’ve got plenty of funds: £20m in the bank, and a facility of three times that sum. We have to be careful for a period. It’s quite sensible to digest what we have done,” he said.
“We have been looking to raise equity. We want to maintain our independence. ... one of the plays will be an IPO.
He added that talks on further funding arrangements were in their final stages.
Oval also released strong results for 2007, with turnover up 41% to £85m and underlying earnings rising 54% to £18m. Hodson said the company had more than doubled last year’s pre-tax profits of £4.2m.
He confirmed that the broker had been in discussions with five insurers in the past three years over taking an equity stake in the business. Allianz currently owns 9.8%, while RSA holds a minority stake in the business.
Hodson said the conclusion of a deal with Perkins Slade was contingent on the board of the Midlands broker.