Ex-Hanson unit Forterra flags IPO

Less than six months after ditching the famous Hanson name in favour of Forterra, the old Hanson Building Products business has flagged plans for a £450 million float in London within weeks. Bought by American private equity firm Lone Star little more than a year ago, billionaire financier John Grayken is clearly after a quick turn.

Forterra, a rather anonymous new moniker - form (For-) to the earth (-terra) - was once part of the mighty Hanson empire, bought by HeidelbergCement in 2007 for £8 billion. The Germans then sold Hanson Building Products, plus some North American assets, to the Americans for £900 million in March 2015.

That new name was obviously part of the rehabilitation process to prepare the UK's second-largest brick maker for life as a listed company again. And these IPO plans come just five months after arch rival and Britain's biggest brick firm Ibstock got its £770 million float away.

Like Ibstock, Forterra is a major supplier to the UK housebuilders - about 95% of sales in 2015 - where a "significant structural undersupply" is driving a housing boom. Between 2013 and 2015, high brick prices meant the firm behind Thermalite blocks and London Bricks grew revenue by an average of 13% per year. Cash profit ballooned at a compound annual growth rate of 78%. Last year it made £71 million, generating margin of 24%.

"The fundamentals of our industry are attractive and with our efficient manufacturing base, strong positions across all product categories, long-standing customer relationships, and significant scope for future capacity expansion, Forterra is very well placed for the future," says chief executive and Hanson man for over 13 years, Stephen Harrison.

Forterra's news comes on the same day that both Harwood Wealth (HW.) and Maxcyte Inc (MXCT) began trading on AIM.

Harwood Wealth attracted early buying, trading as high as 93.5p versus a placing price of 81p. Raising £13.5 million - £10 million of it new money - values the financial planning and discretionary wealth management business at £45 million.

MaxCyte, which sells its cell engineering technology to biotech and drug companies, also did well in first deals Tuesday. Its shares are currently up 10% from the 70p placing price at which the company bagged £10 million before costs. The firm is now valued at over £33 million.

Encouraging stuff

This is all encouraging stuff, particularly as the first quarter of 2016 has been the worst start to a year for global IPO activity since 2009. Volume slumped by 39% and capital raised plunged by 70%, according to accountants Ernst & Young (EY).

There have been postponements in London, and many companies will not even have bothered to kickstart the process, preferring instead to wait for volatility to subside. There have been major concerns about the European Union referendum on 23 June, too. Sixteen floats on either the main market or AIM up to mid-March is down 20% on a year ago, and the $2.7 billion (£1.9 billion) raised is 41% less than last year.

"Despite this, we have seen that well-priced businesses, often backed by private equity, attract investor interest and deliver strong aftermarket performance," said EY's head of UK and Ireland IPOs Scott McCubbin

"Despite the broader political and economic backdrop, London prevails as the leading market in Europe for IPOs. This quarter, London Main Market and AIM accounted for 47% of European listings and hosted two of the top five largest IPOs globally in 2016 so far."

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