AO to float with up to £1.2bn valuation

Listen to this article


AO, the Bolton-based online white goods retailer, will come to market with a valuation of up to £1.2bn – more than 100 times its earnings last year.

The fast-growing “etailer” will float with a price range of 235p to 285p, giving the group a value of between £1bn and £1.2bn. The valuation of AO – formerly known as Appliances Online – drops to a still giddy 72 times when compared with its projected 2015 earnings.

Demand for AO’s float has been high, with the retailer’s book covered in just a few hours on Friday. There are few internet-only listed companies in the UK. Those that do exist, such as Ocado and Asos, tend to trade at extremely high multiples. Asos has a price-to-earnings ratio of more than 100, while Ocado has a market capitalisation of more than £3bn, despite having never made a profit.

When AO – which has about a quarter of the online white goods market in the UK – first started considering a float late last year, it was looking at a market capitalisation of between £300m and £400m.

AO will raise about £60m, which will spent on the group’s efforts to expand into Germany and branch out into new product categories.

The float will also provide John Roberts, the website’s founder and chief executive, with a big payday, along with the rest of his management team, who in total own close to half of the retailer.

With a market capitalisation of £1.2bn, AO will be slightly smaller than electricals rivals Dixons and Home Retail Group, the company behind Argos.

Dixons has claimed its share of online electricals was roughly the same as AO’s and that the older retailer was growing faster than its younger rival.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from and redistribute by email or post to the web.