Brick-maker Ibstock builds small gain after IPO

Brick-maker Ibstock's shares traded higher on their first day of dealings after the company floated on the London Stock Exchange on Tuesday.

The company, which is based in the Leicestershire village of Ibstock and is the country's leading manufacturer by volume of clay bricks, priced its initial public offering at 190p apiece to claim a market capitalisation of £770.5m.

With 40% of the total shares in issue sold as part of the IPO, the company will take a gross £100m and selling shareholders from private equity group Bain Capital and management £208.2m.

Ibstock, which appointed former Lafarge Tarmac chief Jamie Pike as chairman as part of the flotation process, has roughly a 40% UK market share via and a strong market share in the Northeast and Midwest US markets via its Glen-Gery brand.

The flotation is timed to coincide with the structural demand growth in the UK brick market driven by strong 'household formations', a significant shortage of homes and supportive government policies.

Led by chief executive Wayne Sheppard and finance director Kevin Sims, who together have a nearly 50 years' experience at Ibstock team, management believes that against this demand backdrop, the UK brick market is experiencing structural imbalances, with insufficient manufacturing capacity to fulfill UK demand, as the Federation of Master Builders warned in April.

The only UK brick producer to have announced a significant new capacity initiative in the last 12 months, Ibstock has received planning permission to build a new manufacturing plant in Leicestershire that is by 2020 expected to add roughly 100m brick capacity - approximately 13% of the Group's total annual UK realisable brick capacity - and is expected to open in the second half of 2017, producing 30m in 2017 and ramping up further each year.

The new plant is expected to achieve high levels of labour productivity and energy efficiency as well as increase total current domestic UK brick production and capacity by approximately 5%.

On Tuesday the shares climbed to 195.88p by 1315 GMT.