Supreme poised to join AIM through £67.5m flotation

Sandy Chadha

Supreme, the Stretford-based battery and vaping specialist, announced its entry on to the AIM market today, in a flotation worth £67.5m.

The firm, run by high-profile businessman Sandy Chadha who handed over the key of his Bentley after losing a bet, initially annnounced its intention for an IPO almost three years ago.

Unveiling its move today, it said it expects dealings in its share will start on February 1, under the ticker SUP.

Following the float, Supreme’s market capitalisation is expected to be approximately £156.1m.

It said the placing saw strong demand from institutional investors, and added that £7.5m of the gross proceeds raised will be used to partially repay the group’s existing debt, as well as £60m to pay the selling shareholders, including Sandy Chadha who will retain a substantial shareholding in the group, amounting to approximately 56.8% of the shares in issue on admission.

The directors believe that the IPO will enable the company to execute on its growth strategy, raise its profile and provides the ability to incentivise key employees.

Berenberg are acting as sole global coordinator and broker, Grant Thornton UK as nominated adviser, and Beyond Corporate as legal counsel to the company.

Supreme supplies products across five key categories: Batteries, lighting, vaping, sports nutrition & wellness, and branded household consumer goods.

Its capabilities span from product development and manufacturing through to its extensive retail distribution network and direct to consumer capabilities.

A flotation enables the group to efficiently scale up new products, brands, and categories at low cost, as has been the case for vaping and sports nutrition & wellness.

In the year ended March 31, 2020, the company generated revenues of £92.3m, gross profit of £26.8m and adjusted EBITDA of £16.2m.

For the six months to September 30, 2020, unaudited revenues were £56.3m with adjusted EBITDA of £8.4m, an increase over the prior period of 43% and 21%, respectively, demonstrating the company’s resilience through COVID-19.

The directors intend to pay dividends to shareholders in an aggregate annual amount equivalent to approximately 50% of net profits, retaining the balance of earnings from operations to finance the future expansion of the group, with dividends commencing – with an interim dividend – following the notification of the company’s interim results for the six month period to September 30, 2021.

Chief executive and founder, Sandy Chadha, said: “I am deeply proud of the business we have developed and believe our flotation on AIM will provide Supreme with the tools with which to capitalise on a number of exciting growth opportunities.

“We have created a profitable business of significant scale, underpinned by a platform which provides a seamless route to market for a number of leading brands and product categories.

“We have established leading positions across the battery, lighting and vaping markets.

“Coupled with our proven ability to innovate, with recent category entries such as sports and nutrition and branded household consumer goods now contributing substantially to our financial performance, we have a clear path to maintaining sustainable growth.”

He added: “We welcome our new shareholders at what is a very exciting inflection point for our business.”

Close