CAB Payments expects £851m valuation when it floats in London

CAB Payments has set a £3.35 per share offer price for its upcoming flotation on the London Stock Exchange, giving the firm an implied valuation of £851million.

The financial technology group announced plans three weeks ago for a London IPO, saying the move would boost growth, enhance transparency and widen ownership.

It said on Tuesday that the issued share capital is forecast to involve around 254.1 million shares at admission and a minimum free float of about 40 per cent.

CAB Payments announced plans for a London listing on 8 June, saying the move would boost growth, enhance transparency and widen ownership 

In addition, the company revealed there would be a sell-down of shares by a subsidiary of private equity house Helios Investors, which bought CAB Payments seven years ago. 

It will now seek support from big investors for the float before the final offer size is disclosed sometime around 6 July.

Based in Sutton, Surrey, CAB Payments provides cross-border payments and foreign exchange services across over 150 countries, although it specialises in emerging markets.

Turnover at the fintech group climbed to £122million last year, while its underlying earnings more than tripled to £56million.

Bhairav Trivedi, chief executive of CAB Payments, said: ‘I’m delighted to announce to the market a compelling offer price.

‘CAB Payments has a differentiated business model with an attractive economic profile marked by profitability, cash generation and strong margins, and it benefits from structural growth drivers.

‘We have been pleased with the investor engagement so far and are excited to continue to meet the institutional and retail investment community over the next week.’

Positives: ‘CAB Payments has ‘an attractive economic profile’ and ‘benefits from structural growth drivers,’ remarked Bhairav Trivedi, chief executive of CAB Payments

Its upcoming flotation comes amid major fears that firms are shunning the UK capital in favour of Wall Street, where they can attract higher valuations from a deeper pool of investors.

Since peaking in 2008, the number of listed businesses in London has plunged by 40 per cent, according to the UK Listing Review, while only 5 per cent of IPOs between 2015 and 2020 took place in the UK capital.

The day before CAB declared its listing plans, the world’s largest soda ash producer, WE Soda, said it would seek a London IPO, which investors predicted could have valued the firm at up to £7billion.

Yet the following week, the Turkish-owned company backed out, with its chief executive citing ‘extreme investor caution’ in a major blow to the UK stock market.

Others to have snubbed the British capital include semiconductor maker ARM Holdings, whose parent company Softbank chose New York despite hefty lobbying from the UK government.

In the first quarter of 2023, the amount raised from London flotations dived by 80 per cent year-on-year to £81million, according to figures from Ernst & Young. Only two listings occurred on London’s main market and three on the junior AIM index.

Some businesses have also decided to switch their primary listing to Wall Street, such as building materials supplier CRH Holdings, gambling operator Flutter Entertainment, and plumbing group Ferguson.