DSW Capital to raise £5m in IPO with a market cap of £21m

Nicole Burstow, CFO, and James Dow, CEO

DSW Capital, the owner of the Dow Schofield Watts, is to float on the stock market this week, raising £5m.

The flotation will give the Daresbury company a market capitalisation of £21.4m, based on a share price of 100p.

DSW Capital operates a platform business model that provides a flexible and autonomous alternative to traditional accounting and professional services firms. It currently has 19 licensee businesses with 82 fee earners in offices in Daresbury, Manchester, Leeds, London, Reading and Aberdeen.

Licensee businesses trade primarily under the Dow Schofield Watts brand.

The company’s vision is for the Dow Schofield Watts network to become the most “sought-after destination for ambitious, entrepreneurial professionals to start and develop their own businesses.”

DSW’s challenger model encourages diversity and the firm is attracting a high level of female partners.

Circa 22% of Dow Schofield Watts partners are female, similar to the levels seen at the Big 4. However, the majority of female partners at Dow Schofield Watts operate in corporate finance and transaction services, areas traditionally dominated by male partners.

For the year ended March 31, 2021, DSW Capital received an average licence fee of 14.7% of licensee revenues and generated operating profit of £1.7m and operating cash flow of £0.8m. The three-year historical Dow Schofield Watts network revenue CAGR to FY21 was 22%.

DSW Capital aims to use the funding to scale through organic growth, geographical expansion, additional service lines and invest in ‘break outs’ – existing teams in larger firms. The directors are targeting high margin, complementary, niche service lines with a strong synergistic fit with the existing Dow Schofield Watts network.

James Dow, CEO and co-founder of the group, sold no shares in the IPO and will hold circa 14.5% of the group when trading begins on AIM on December 16, 2021. Combined, the directors will hold 24.5%.

James Dow, CEO of DSW Capital, said: “We are delighted to announce our IPO and admission to AIM, which are important milestones for DSW Capital.
“The successful fundraise will support our strategy to capitalise on the substantial growth opportunities presented in the changing UK accounting market and our vision to become the most sought-after destination for ambitious, entrepreneurial professionals to start and develop their own businesses.

“The success of our model is demonstrated by the rapid rise of the DSW Network up the sector rankings. We believe our new quoted company status will help raise the profile of DSW further, enabling us to accelerate the growth of our network.”