Official share trading in watches and jewellery retailer Watches of Switzerland (LON: WOSG) commenced today and the share price ended the day at 300p – an 11% premium to the placing price of 270p.
There were four days of conditional dealings prior to trading commencing on the premium list. The highest point reached in those dealings was 315p. On Monday, the share price closed at 309p.
The price had been set at the lower end of the £600m-£800m indicative valuation range. The current share price values the retailer at nearly £720m.
Existing shareholders raised £63m in the placing while Watches of Switzerland raised £139.5m to pay off debt and expand the business. Net debt should fall to £120m with new facilities replacing the old borrowings. Pro forma net assets are £223.4m.
Management also believes that a listing will raise the profile of the company and its retail brands, The watch brands sold by the group include Rolex, Breitling and Omega.
There was an initial article on the flotation when the pre-pricing registration document was issued. That can be found at https://ukinvestormagazine.co.uk/watches-of-switzerland-on-course-for-london-ipo/
The prospectus reveals two sets of litigation that Watches of Switzerland is involved in. One is as part of a class action the other involves litigation by customers.
Watches of Switzerland and other subsidiaries of the group are part of two class actions with Mastercard and Visa respectively that allege they charged anti-competitive interchange fees.
Customers in Florida are suing Watches of Switzerland because receipts displayed more than the last five digits of their debit or credit cards. This litigation was filed on 17 March 2019.
There are no plans to pay a dividend because the cash generated is being ploughed back into the retail operations.
There has been a combination of organic and acquisitive growth. The US operations are being built up by acquisition.
Watches of Switzerland and other retail brands such as Mappin & Webb are valuable names and they are performing well. However, the share price may drift lower and provide buying opportunities in the coming months.
Watches of Switzerland (LON: WOSG)
Watches and jewellery retailer
Flotation date: 4 June 2019
Issue price: 270p
Amount raised: £139.5m
Market capitalisation: £647m
Sponsors: Barclays / Goldman Sachs