Proactive Investors - Run By Investors For Investors

Most followed: Merlin Entertainments, RBS, Wasabi Energy, Premier African Minerals


IPOs are becoming something of a craze, with Merlin Entertainments, the company behind Madame Tussauds and Legoland, jumping on the bandwagon.

It is eyeing up an IPO, which could value it at up to £4 billion as it looks to ride the wave of successful stock market flotations of 2013.

It follows in the footsteps of Royal Mail, housebuilder Crest Nicholson (LON:CRST), and estate agents Countrywide (LON:CWD) and Foxtons (LON:FOXT), all of which are trading above their placing prices.

Owning a share of Merlin is likely to be worth a fair few Lego bricks given that there are an estimated 400 billion Lego bricks in circulation.

Merlin runs 99 attractions in 22 countries, welcoming more than 54 million visitors through its gates last year, generating revenues of over £1bn and underlying earnings of £346 million.

Small investors will be able to participate in a primary offer with the minimum investment set at £1,000. Merlin is raising £200mln of new money.

Individual shareholders also get the perk of a 30% discount on two adult or one family annual pass at the group’s theme parks and attractions.

Current owners Blackstone, CVC and Lego group KIRKBI will also sell a portion of their stakes in the global offer.

Chief executive Nick Varney said: “Our experienced team has the ability and ambition to deliver on our plans, as we develop our existing businesses and roll out Merlin's unique portfolio of leisure brands internationally. 

“The IPO will provide Merlin with the platform for our next stage of development and allow us to plan for the longer term.” 

He added: “As such we are very excited about this next chapter of our story, and look forward to creating value for our shareholders and more magic for our customers.”

Also on the agenda for private investors was the potential break-up of Royal Bank of Scotland (LON:RBS).

Chancellor George Osborne told the Telegraph a ‘good bank/bad bank’ split could happen in the next few weeks.

Shares fell 5% to 354p as investors feared the ramifications of such a move, which Numis Securities thinks would be a good thing.

“The good bank and its shareholders are isolated from further  deterioration, and bad-bank management can implement the work-out with a longer term view, in a more considered way,” it said.

Nomura was not convinced however.

The broker said: “We continue to believe that minority shareholders have much to lose from an unfavourable outcome of the “Good Bank/Bad Bank‟ review with the government maintaining considerable leverage over the minorities with the Dividend Access Share (DAS).”

It thinks the group faces considerable challenges to get back to profit-making territory, “which we fell will take a long time”.

On the small cap side of things, Wasabi Energy (LON:WAS) shares continued to power up after Thursday’s announcement that it could bag more than A$70mln from a Turkish geothermal project.

Plans to expand the Tuzla Geothermal Power Project were validated by an impressive set of numbers from a pre-feasibility study.

It showed an indicative net present value (NPV) of A$142 million, an internal rate of return (IRR) of 57% and EBITDA (underlying earnings) of A$19.6mln.

Wasabi is hoping to generate 25 megawatts by 2015, but Tuzla could power up to 18.5 MW on its own.

China meanwhile has the potential to generate as much as 100 MW for the company, making its 25 MW target look somewhat conservative.

After an impressive rise over in Australia, where its shares are also listed, Wasabi jumped 20% in London to around 0.45p, with 33mln shares changing hands before midday.

There was also plenty of activity from shares in Premier African Minerals (LON:PREM), which jumped 36% to 1.7p. Punters on the bulletin boards were getting excited about the prospect of news about funding and an offtake deal.

© Proactive Investors 2015

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.