People walk past the entrance of the London Stock Exchange in London, Britain. REUTERS/PETER NICHOLLS
People walk past the entrance of the London Stock Exchange in London, Britain. REUTERS/PETER NICHOLLS

London — Moonpig surged as much as 29% in its London trading debut after the online greeting-card company and its shareholders raised £491m ($672m) in an IPO, tapping investor demand for businesses benefiting from coronavirus-related lockdowns.

The shares climbed 27% to 442.90p in London from the IPO price of 350p.

Sales at Moonpig more than doubled in the six months ended October 31, according to its registration document, as lockdowns forced many people to forgo in-person celebrations and turn to online deliveries of gifts and cards instead. The company said it held a 60% market share in the UK among online card specialists in 2019 and a 65% share in the Netherlands among the top three digital card players.

“It’s remarkable to see a listing by a company that owns this much market share,” said Oliver Brown, a fund manager at RC Brown. “They effectively created the segment.”

The deal comes amid a resurgence in IPO activity in London, with the market off to the strongest start to a year since 2008 after a Brexit agreement cleared uncertainty for domestic firms. Permira Holdings-backed Dr Martens, whose shareholders raised £1.3bn in a London listing, surged 22% in its debut session on Friday. Internet IPOs also are in demand about Europe, with online used-car dealer Auto1 Group in the midst of a €1.6bn offering in Frankfurt.

Moonpig’s sale of 140.3-million shares priced at the top of an initial price range, and values the company at about £1.2bn, it said in a statement on Tuesday. The deal size was increased last week and order books for the initial public offering closed a day early, thanks to strong interest from fund managers.

The bulk of the proceeds from the sale of the 41% stake in Moonpig will go to selling shareholders including Exponent Private Equity Partners, which bought the company in 2016. The company, which owns the Moonpig brand in the UK and Greetz in the Netherlands, raised £20m in the offering to pay down debt. It expects to be eligible for inclusion in the FTSE UK indices.

Moonpig warned in its registration document that it will face increased competition as brick-and-mortar stores shift to online sales, and that it may not retain its new customers once lockdowns are lifted. The company is counting on its data-driven technology platform to fuel growth. Moonpig’s first-half revenue growth was driven by its mobile app, which saw its share of total orders double to 33% in October from the prior year.

“Moonping could become the go-to online market place for gifting,” Brown said, adding that the company’s growth potential also lies in its plans to make inroads in the US and Australia. Besides, many of the online habits formed amid lockdowns are likely to “stick”, he said.

Moonpig was founded in 2000 by Nick Jenkins, a former commodities trader and star of British TV show Dragons’ Den. He sold the company to Photobox, an online photograph printing and personalised gifts company, in 2011. Moonpig split from Photobox in 2019.

Moonpig is now led by CEO Nickyl Raithatha and chair Kate Swann, who joined the company in 2019 after making her name as CEO of WH Smith and SSP Group. Raithatha previously worked at Goldman Sachs and German start-up factory Rocket Internet.

Two investors, BlackRock and Dragoneer Global Fund II, took up a chunk of the offering, investing £80m  and £50m, respectively.

Existing shareholders of Moonpig can sell another 14-million shares if there is enough demand.

Citigroup  and JPMorgan Chase  are joint global co-ordinators, while HSBC​​​​, Jefferies International  and Numis Securities are joint bookrunners.

Bloomberg 

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