Biffa launches biggest IPO since Brexit vote

Biffa, the UK based waste management business, has announced plans to initiate its first initial public offering (IPO).

The offering will be the biggest of its kind since the UK voted to leave the EU on the 23 June 2016 and will value the 104 -year-old company at over £1bn.

The waste management firm is the second biggest of its kind in Britain with 7000 employees and contracts with several local councils. It collects, processes and disposes of 6.6m tonnes of waste and recyclables for more than 95% of UK postal codes and 2.4m households.

Its annual turnover rose 7.4% to £927.5m and underlying operating profit increased by 49.2% to £62.5m. Underlying earnings before interest tax depreciation and amortisation (EBITDA) was £122.3m. According to the firm trading has been consistently good over past three years.

The company plans to use the funds raised from the flotation to reduce its debt and pay the government with regards to a dispute over landfill tax. It also plans to consolidate its presence in the market by buying out its smaller competitors.

According to the firm the UK waste market is attractive with growth expected at 5% per year until 2020 as the population and number of households increase. Extra rules requiring separate collections and treatment of waste items would also lead to more business.

The company plans to buy out smaller competitors that would struggle to cope with increasing regulation and complex supply chains. The firm has completed 20 synergistic acquisitions since December 2013.

Ian Wakelin, Biffa’s chief executive, said: “There are multiple levers for continued organic growth and margin expansion in a market underpinned by structural growth drivers which favour Biffa’s service-oriented business model. We operate in a fragmented market providing opportunities for further highly synergistic in-fill acquisitions.”

The IPO market froze in the first half of the year as companies waited for the result of the EU referendum, on 23 June 2016. It has however seen signs of recovery with companies like PureGym which announced plans on Wednesday to raise £190m.

Chief executive Ian Wakelin of Biffa said: "We believe there are multiple levers for continued organic growth and margin expansion in a market underpinned by structural growth drivers which favour Biffa's service-oriented business model. Moreover, we operate in a fragmented market providing opportunities for further highly synergistic in-fill acquisitions.”