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.

Business-to-business cross-border payments group CAB Payments Holdings has confirmed plans to launch on the London Stock Exchange this year.

A trend of businesses spurning London in preference of New York has accelerated this year, with global banking woes pushing the sum raised from UK listings down by 80 per cent in the first quarter, according to Ernst & Young figures.

WE Soda yesterday dealt another blow to the market after scrapping plans to list in London over disagreements over valuation.

Boost: CAB Payments Holdings has confirmed plans to launch on the London Stock Exchange this year

A final offer price is yet to be set for the CAB Payments listing but the initial public offering on London’s main market could take place as early as next month.

The offer will be comprised of a secondary sell-down of existing ordinary shares held by Merlin Midco Ltd and ‘certain’ other shareholders. The IPO will be targeted at institutional investors outside of the US.

The group said there had been ‘significant interest’ in a possible LSE float since it hinted at the move earlier this month. 

Analysts previously estimated that the company could achieve a valuation of between £800million to £1billion.

Ann Cairns, chair of CAB Payments, said: ‘Bringing CAB Payments to the public market underscores our confidence in the business and its value generation potential, as well as our confidence in the UK as the home for innovative and growing global businesses, and cements CAB Payments as a preferred payments and forex partner for blue-chip companies transacting in emerging markets. 

‘We have been pleased with the investor engagement so far and look forward to further discussing our value proposition with investors, based on our strong track record of profitable and cash generative growth that was built on the foundation of a well-invested technology platform, a compliance-first culture and robust governance frameworks, and a business model that delivers real economic development benefits to emerging markets.’

Barclays Bank and JP Morgan Chase and Co have been engaged as coordinators and sponsors for the IPO.

Claire Trachet, chief executive of business advisory Trachet, said: ‘Both global and UK businesses are still looking to list on the LSE, however, until economic conditions strengthen, and investor trust and appetite is restored, the city will continue to experience a largely inactive IPO market. 

‘I think we will eventually see an increase in UK listings, but this won’t happen until inflation numbers stabilise and looming recession fears fade, lifting the curtain on what remains an uncertain economic outlook. 

‘In the meantime, we’ve quickly moved into an environment where companies are seeking funding from private equity vehicles or strengthening their position through M&As.’

According to research by Proactive Investors, since the start of April, there have been over a dozen initial public offers, including four in the first few days of June.

In the secondary market, the research logged 20 fundraisers by existing listed companies in the last month for a total of just under £40million, the biggest of which was just over £6million, the smallest £250,000.

A business-to-business cross-border payments company has become the latest to reveal plans for a London initial public offering.

CAB Payments Holdings revealed its ‘potential intention’ for an IPO, which bosses say will help broaden its ownership, improve transparency and drive sustainable growth.

The firm’s announcement of its intention to list comes a day after WeSoda revealed similar plans, while Amicorp Fund Services and pension tech firm Smart have also said they have plans to list in the City soon.

Bhairav Trivedi, CAB chief executive, said the move shows confidence in the group’s offering, market and ‘strong financial profile’ – and also ‘confidence in the UK as the home for innovative and growing global businesses’.

‘A home for innovative and growing global businesses’

It comes amid fears the City may have lost its position as a key listing hub, after the amount raised in London floatations slumped 80 per cent annually to just £81million in the first quarter of 2023.

London’s main market saw only two IPOs in the period, raising £63million. There were three flotations in the junior AIM market, raising £18million.

This year has also seen the high profile snub of London from chip maker Arm as other companies opted to move their main listing elsewhere.

CAB Payments is a business-to-business cross-border payments and foreign exchange provider, specialising in emerging markets.

The group’s former parent company, Crown Agents, was founded in 1833, but CAB was acquired by Helios funds in 2016, which has helped to supercharge growth.

CAB achieved total income of £109.4million in 2022, up from £53million the previous year, with adjusted earnings before nasties of around £54.6million, according to its own figures.

But revenue rose 145 per cent year-on-year to £41.3m for the three months of this year, driven by higher by ‘volume and average take rates… and new customer wins’ made the previous year, CAB said.

Should CAB go ahead with its plans, it will list ordinary shares to trade on London Stock Exchange’s main market for listed securities.

As well as institutions like banks, retail investors will be able to participate through an intermediaries offer via the REX platform.

Mr Trivedi, who has previously held a number of senior roles across the payments industry, said: ‘Our intention to list on the London Stock Exchange is a sign of confidence in the high quality offering we provide to our customers in a large and growing market; confidence in our strong financial profile backed by a track record of revenue and Adjusted EBITDA growth, as well as cash generation; and confidence in the UK as the home for innovative and growing global businesses.’

He added the move would ‘broaden’ CAB’s ownership and ‘bring more of the transparency that we value so highly throughout our business model’.

‘Operating as a publicly traded company will help us to continue to pursue our strategy of delivering long-term sustainable growth all cementing our position as a payments and forex partner of choice for blue-chip customers transacting in emerging markets.’