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Buyout Firm Bridgepoint Soars 28% in London Trading Debut

·2 min read

(Bloomberg) -- Bridgepoint Group Ltd. surged in its first day of London trading as investors raced to buy shares of a rarely listed private equity firm.

The stock jumped as much as 28%, pushing its market value to about $5 billion. The firm, which was spun out of Royal Bank of Scotland Group in 2000, owns stakes in Burger King franchises and sushi fast-food chain Itsu.

Bridgepoints’s IPO ranks as the largest listing of a U.K. private equity firm in decades. Unlike in the U.S., where firms like Blackstone Group Inc. and KKR & Co. are already public, buyout groups in Britain are usually private partnerships run by their founders or immediate successors.

“Private equity is one of the most in-demand asset classes right now given the opportunity for these businesses to pick up investments at relatively cheap valuations,” said Liberum Capital strategist Joachim Klement.

Still, the big pop in the shares on Wednesday raised some questions about whether Bridgepoint might have priced its deal too low and missed out on extra cash. The company and its owners raised 789 million pounds ($1 billion) in the deal, valuing the firm at 2.9 billion pounds.

“It’s possible Bridgepoint could have priced the IPO higher, but that would have left them potentially open to accusations of short-termism and looking to make a quick buck,” said Russ Mould, investment director at AJ Bell Plc.

Mould compared Bridgepoint’s IPO to Blackstone and Fortress, which both went public in 2007, just before the financial crisis caused equities to crater worldwide.

“I’m sure they would have had a lot of questions about Blackstone and Fortress,” he said. “That didn’t work out well.”

Buyout firms are splurging billions on takeovers of publicly traded British targets as the economy comes out of lockdown and Brexit disruptions ease.

Bridgepoint is the latest private equity company to look to public markets in recent weeks. Antin Infrastructure Partners is considering a listing and TPG is weighing a potential IPO or merger with a special purpose acquisition company, people with knowledge of the matter have said.

If additional stock is offered to cover an over-allotment option, Bridgepoint’s IPO could raise as much as 907 million pounds.

Bridgepoint raised 300 million pounds selling new stock, while its backers offloaded existing shares worth 489 million pounds, the company said in a statement. Fidelity International, T. Rowe Price Group Inc. and Mawer Investment Management took up 300 million pounds, or a third of the total offering.

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