Sunday 26 March 2017

Blueface eyes US entry after pulling London IPO

Blueface chief executive Alan Foy
Blueface chief executive Alan Foy
Gavin McLoughlin

Gavin McLoughlin

Telecoms firm Blueface is set to embark on "a huge global expansion", after pulling a planned IPO.

Chief executive Alan Foy is eyeing entry to the US market after walking away from two potential acquisitions, one in the UK and one in Europe.

The company - backed by Lord Edward Iveagh, heir to the Guinness fortune - plans to open an office in New York in September and will mull an equity raise next year.

In a lengthy blogpost detailing his reasons for not proceeding with a float on London's Alternative Investment Market, Foy said he had second thoughts after market volatility in the first quarter of the year.

"In Q1 2016 there was a major UK equity and global market contraction and we grew increasingly nervous of the equity market volatility and softness of public valuations, particular in AIM stocks," he said, adding that over time the company became increasingly concerned that the UK would vote for Brexit.

"While the UK acquisition was getting cheaper on a currency basis by the day, we were acutely aware of the earnings impact that this would have going forward if Sterling were to fall further," Foy said.

The company also looked at raising equity on a private basis in furtherance of acquisitions but decided not to proceed with either of the two purchases, with Foy citing cultural mismatches and integration challenges as another factor in management's thinking.

"We agonised over this decision to abort the transactions, however, the combination of the macro and micro factors were very significant and could not be ignored. Ultimately, while it was the 11th hour and all of our preparation work was effectively a 'sunk cost', I believe we made the right decision," he said.

"With our lessons learned, we are now about to embark on a huge global expansion - across Europe and the USA.

"We have learned our lessons regarding the pros and cons of evaluating M&A decisions and appreciating the value drivers and cultural (organisational and national) context. We have refocused on a core belief that an expansionary, open approach to doing business on a global basis will ensure the right blend of ambitious growth and technological innovation," Foy added.

Blueface is a "cloud communications" firm - its technology enables customers to bring landline and mobile communications systems together on one platform.

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