Monday 23 October 2017

Founders' stake worth €200m as Applegreen prepares for flotation

Applegreen co-founder and chief operations officer Joe Barrett
Applegreen co-founder and chief operations officer Joe Barrett
John Mulligan

John Mulligan

The two founders of Irish petrol station chain Applegreen will see their combined stakes in the business valued at about €200m following a stockmarket floation of the company next month.

Applegreen was co-founded by chief executive Bob Etchingham and chief operations officer Joe Barrett in 1992. Mr Etchingham owns 75pc of the firm with Mr Barrett controlling 25pc. They hold those stakes through a vehicle based in Malta.

Applegreen plans to raise €70m via the flotation in London and Dublin, to fuel expansion of the business, primarily in the UK. It will value the company at about €280m.

The company's board has also been bolstered by the appointment of two high-profile executives.

Former Ryanair chief financial officer and deputy chief executive Howard Millar joined the board of Applegreen this week as a non-executive director. So too has former Green Property finance director Daniel Kitchen, who joins as non-executive chairman. Mr Kitchen is also the former government-appointed chairman of Irish Nationwide.

Investors in the UK, Ireland and the United States are being lined up to take stakes in the Applegreen.

Mr Etchingham, a former Esso executive, said that while the company has had offers from private equity investors, the board felt that such stakeholders wouldn't share a long-term vision for the business.

Applegreen operates 152 outlets, including 96 in Ireland, 54 in the UK and two in Long Island, in the United States. It has about a 12pc share of the motor fuel market in Ireland, and employs a total of 2,200 people.

While Applegreen will have a 25pc freefloat following the flotation, Mr Etchingham declined to say precisely how much of their personal stakes management are selling. However, he and Mr Barrett are expected to retain a significant majority stake in the company. Company documents also note that the firm granted 2.35m share options to management last December, which have an exercise price of €1 per share and will vest on the flotation date.

Applegreen generated revenue last year of €937.3m, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of €22.8m. In 2013, it reported turnover of €804.6m and a profit after tax of €8.7m. Mr Barrett said Applegreen generates about one-third of its gross margin from food sales.

The company operates eight motorway service areas in Ireland, and has just opened its first such operation in Northern Ireland. It has no such service areas in Britain but is actively looking for opportunities to open its first such outlets there.

Applegreen has partnered with food and beverage brands names such as Costa Coffee, Burger King and Lavazza to have outlets at its motorway service areas.

Its new Northern Ireland operation also marks its first partnership with UK high street bakery Greggs. Mr Barrett said that in the first four months of this year, Applegreen bought 13 sites in the UK and has a "good pipeline of opportunities" there. He said the company does not intend to target continental Europe.

Applegreen has a long-term ambition to extend its footprint in the north-east of the US, but Mr Barrett confirmed that most of the funds being raised via the floatation will be targeted at investment in Britain and Northern Ireland. It entered the US market last year.

Mr Barrett added that the group isn't hunting for large acquisition deals to boost its UK footprint, but will stick to making individual purchases.

Irish Independent

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