Worldpay – the biggest yet?
Payments processing firm Worldpay could be the big one of 2015. Worth a potential £5bn, this would make it the biggest UK IPO since 2011. Pricing looks set to be around 235-250p/share.
Worldpay is a leader in global payments, providing the technology required by retailers to accept multiple payment methods across multiple channels, nearly anywhere in the world. On a typical day it processes around 31m mobile, online and in-store transactions worldwide via access to 326 payment methods in 126 currencies across 146 countries.
Partnership with Mastercard and Visa is a major endorsement along with its success in enabling retailers to reduce the chances of lost sales and protect both the retailer and consumer against fraud.
Furthermore, the quantity of payments processed provides access to a wealth of highly valuable consumption and payments data which can be used with analytics to provide insights services into consumer and retailer performance. Worldpay grew profits by 10% per annum (to £370m) in 2011-14, while H1 2015 saw a further 13% growth.
Following its IPO, Worldpay expects a 25% shares free float (shares available to trade) which would make entry into the UK 100 almost a given while dividend distribution of 20-30% of profits is being targeted.
Will a 2015 IPO result in a bumper pay-day for the payments processor?
Hastings Direct – another assured IPO?
Motor insurer Hastings Direct could be valued at an impressive £1.5bn which would make it one of the biggest UK IPOs of 2015 and see it join the likes of Direct Line Group (DLG) which was worth £2.6bn in Oct 2012 but whose shares have more than doubled since!
One of the UK’s fastest growing insurers servicing the domestic car market, the group achieved 23% average annual profits growth in 2012-14 to hit £105m last year (H1 2015 +19%) and amassed a 5.5% market share in UK private car insurance via 1.9m live policies (vs 3.6% and 1.1m in 2012). A whopping 88% of business comes from Price Comparison Websites (PCW) despite having a highly selective policy which results in its 72% claims loss ratio being above the industry average.
Hastings benefits from being highly selective with quotes and policies allowing it to post solid results based on a ‘quality over quantity’ risk assessment model which enabled it to account for 11.0% of all new PCW private motor insurance sales in 2014, returning around 1.5m quotes per day.
The company’s largest shareholder is a holding company that falls under the umbrella of Goldman Sachs, which will retain a significant holding after the IPO. A dividend equal to 50-60% of profits is proposed from 2016 while the expected 25% free float of available shares should be enough to see it included in the index at the next index reshuffle.
Has Hastings Direct got what it takes to be the next Direct Line (DLG)?
Both Worldpay and Hastings Direct published their ‘Intention to Float’ documents (links above) in mid-September. However, IPO pricing has yet to be confirmed. When further details emerge on pricing, dates for conditional trading etc. we will endeavour to keep you updated.
