Investors warm to Halfords

CAR parts and bike retailer Halfords floated on the stock market today at 260p a share. The shares, which will be traded by institutions only until Tuesday, rose to 264p in early trading but were at the bottom end of analysts‘ original expectations of a listing between 250p and 300p.

'Halfords and their financial advisers took a chance,' said a spokesman for spread-betting outfit Cantor Index, which has being taking bets on the float. 'But if the early skirmishes are indicative, it seems that they might have got away with it.'

The company‘s private equity backer CVC Capital Partners, which also owns car repair group Kwik-Fit and a part-stake in department stores group Debenhams, braved tough market conditions to press ahead with the flotation.

Around 45% of Halfords shares are expected to be in public hands with 46% retained by CVC and a further 6% by management. Chief executive David Hamid is the largest individual shareholder with just under 2%. His colleagues Nick Carter (finance) and Ian McLeod (trading) each hold just under 1%.

Last month, the Evening Standard revealed each would be selling up to a quarter of their shares. Non-executive chairman Rob Templeman also has a sub-1% holding. He made millions selling Harveys and Homebase and is making another fortune running Debenhams for CVC.

Halfords said it plans to use the £135m raised, coupled with an estimated £195m of borrowings available under new bank facilities and cash balances, to repay debt. The group increased turnover by 10% to £578.6m in the last year while operating profits rose 56% to £79.2m.

Halfords, which has 387 stores and 9,200 staff, was bought from High Street chemist Boots by CVC in 2002 for £427m. It plans to open 10 superstores and six new stores this year.

Merrill Lynch and Citigroup brokered today‘s launch. It follows last week‘s initial public offering (IPO) for football shirt maker Umbro. It was valued at £145m compared with previous hopes for £200m.

However, the IPO industry, the staple diet for investment banks, has remained quiet despite a slight improvement this year. Other companies to list on the main market were Cambridge Sililcon Radio, raising £89m, Ark Therapeutics, which raised £55m, and the dual London/Dublin-listing of Eircom, which raised £544m.