One of Britain’s lesser-known technology success stories is to list in London with a value at £500 million, which will result in a payout of millions for its founder and management team.
Softcat, based in Marlow, Buckinghamshire, will be the second large flotation for a UK technology company this year, after that of Sophos, a cybersecurity specialist.
The floats have been hailed as coups for London market, as it beat Nasdaq for the listings, although Mimecast, a City-based cloud email service, said at the weekend that it had spurned London in favour of a Nasdaq debut.
Martin Hellawell, Softcat’s chief executive, said that the company had considered an American listing “for about ten seconds” before opting for a London float. “We are very much a UK company,” he said. “We are UK-focused and it is a natural home for us.”
Softcat began life as a mail-order software catalogue in the early 1990s. It was founded by Peter Kelly, who owns 52 per cent of the shares and who set up the business to focus on software licensing for mid-sized companies. He resigned from Softcat three years ago and has ceased to be a director as a result of the listing plan.
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Softcat is to float at least 25 per cent of its shares, with the leading investors reducing their stakes. Mr Kelly and his family, whose holding is worth £260 million, is due to cash in stock worth about £63 million.
Mr Hellawell, a British IT veteran, owns 12 per cent of the company, so could be in line for £15 million. About 190 other Softcat investors, mostly staff, will also celebrate a big payday.
Softcat is now a reseller of technology services to mid-sized companies, including the Ministry of Sound and Stobart Group. It has grown at 33 per cent a year over the past five years.
It plans to pay a dividend of between 40 per cent and 50 per cent of its profit after tax, which rose to £31 million this year, compared with £27 million the year before. Its revenue hit £596 million, up from £505 million. It generated £52 million in cash this financial year.
Mr Hellaway said that the listing was not an attempt to raise funds for an acquisition, as it had never bought another company, or to push outside the UK. “We’ve got a good formula and we don’t want to depart from that,” he said.
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With IT companies such as Logica disappearing from the British market over the past decade, Softcat’s float breathes life back into what was once a vibrant sector.
John O’Brien, an analyst at TechMarketView, called the business a “small fish in a big pond”, competing with larger rivals, including Computacenter. Mr Hellaway said that as the company had only 5 per cent of the market, it had lots of growth potential.