SimplyBiz's stock market debut bruised by falling share price – Shares magazine

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Business support services company SimplyBiz (SBIZ:AIM) hasn’t enjoyed the best start to life on the stock market as its shares fall 3% to 165p on their first day of dealings.

The company has raised £30m in new money by issuing new shares at 170p each.

Existing shareholders including chairman Ken Davy and joint chief executives Neil Stevens and Matt Timmins have also sold £34.6m worth of stock as part of the IPO (initial public offering).

WHAT DOES IT DO?

The Huddersfield-based company provides compliance and business services to financial advisers and institutions in the UK.

Formed in 2002 by Ken Davy, it operates across two divisions; intermediary services and distribution channels. The former provides compliance and regulation services to over 3,400 financial intermediary firms.

The distribution channels business provides marketing and promotion services to around 135 financial institutions including asset managers, mortgage lenders as well as life assurance and pension companies.

The company’s compliance offering is topical given the regulatory tsunami that has been the hitting the UK.

EU directives such as MiFID II (the updated markets in financial instruments directive) which came into force in January and the new data protection rules in GDPR out next month could create a steady stream of clients for the company.

Simplybiz argues that compliance is a core requirement for financial advisers and is costly to perform in-house.

Davy is currently chairman of rugby league side Huddersfield Giants and life president of Premier League football team Huddersfield Town.

FINANCIAL TRACK RECORD

Simplybiz employs over 400 staff and has seen its revenue increase from £12m in 2010 to around £44m at the end of last year.

It has made six bolt-on acquisitions and is planning more after its IPO helped to reduce debt.

One of the fund managers who took part in the IPO is Oliver Brown from MFM UK Primary Opportunities Fund (GB00B8HGN522). He says he likes the company and invested in it ‘because in an ever growing world of regulation, the IFA community increasingly need their services and support’.

He adds: ‘It’s a reasonably defensive growth story with 92% recurring revenue, they have a good opportunity to grow the number of IFAs they support and a 2019 PE (price to earnings ratio) of less than 14x and a dividend yield of 2.5% that is set to increase, looks attractive to us.’


Issue Date: 04 Apr 2018    

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