Dentons preparing to float on AIM

According to documents seen by Professional Adviser, the company is seeking access to equity funding in order to make acquisitions, enhance the profile of the business and promote its brand, and help attract, retain, reward and incentivise staff.

The iniitial public offering (IPO), which could see Dentons listed on AIM by the middle of March, would take the form of a partial sale by the company’s founders worth some £5m.

The existing shareholders would sell down their stake in proportion to their pre-IPO holdings in order to create a free float of approximatley 25% of institutional investment. No new money is expected to be raised at admission. Majority shareholder and Dentons executive chairman Martyn Rose would retain his 60% ownership post-admission.

One analyst note also seen by Professional Adviser suggested Dentons should be valued at 13x to 14x its enterprise value/earnings before interest, tax, depreciation and amortisation for the 2017 calendar year – implying a market capitalisation of between £20m to £22m for the company on admission to AIM.

The note also said the company intended to adopt a “progressive dividend policy” upon listing and forecast a 2% to 3% annualised yield.

AcquisitionsThe analyst note said that, in the medium term, it expected Dentons would look to consolidate the pensions space through acquisition and integration of other industry players. It added: “Identifying and crystallising these acquisitions is key to delivering step-change scale beyond our base case forecasts.”

The note estimated there are currently some 90 pensions administrators in the UK and argued “the longer tail of small operators are clear acquisition targets for Dentons”. It added: “Long term, we believe mid-level consolidation of larger players will likely prevail, resulting in nearer 60 administrators in the space.”

A spokesperson for the company said Dentons did not comment on market rumour or speculation.