Eyewear retailer GrandVision to float on Euronext

GrandVision, the world's largest optical retailer, which owns the UK's Vision Express chain, is eyeing a flotation on Amsterdam's Euronext with a valuation analysts believe could top €1bn.

In what will be one of the first big tests of investor sentiment in the European equities market this year, the flotation was announced on the same day as UK tool hire company HSS launched a separate bid to raise £100m on London's FTSE.

One of several consumer-focused companies seeking to tap the IPO market, the move follows online ticket seller Thetrainline.com's announcement last week of its intention to raise £75m, and growing expectation that European retailers including Net-a-Porter and Dutch discounter Action could follow suit.

GrandVision, which operates more than 5,600 optician stores in 43 countries, is owned by a Dutch subsidiary of the Curacao-domiciled investment house HAL Holding. Starting off with less than 200 outlets in 1996, HAL has built the chain up through a series of acquisitions as the market for optical retailing consolidates, with branches across Europe, Latin America and Asia.

The global eyecare market was worth €88bn in 2014 and is poised to grow 6.5 per cent annually for the next five years according to Euromonitor data, as consumers in emerging markets and the world's ageing population boost demand.

In emerging markets, which account for more than 8 per cent of the group's total revenues, demand is forecast to rise more than 10 per cent, Theo Kiesselbach, GrandVision's chief executive, said.

"Emerging markets are the smallest but fastest-growing part of our business," he said. Seeing further opportunities for consolidation in the future, he added that about 40 per cent of all opticians in Europe were still operated by independent retailers and that this figure was "much higher" in markets such as China, Peru and Turkey which the retailer entered last year.

The offer, which consists of secondary shares, will see HAL sell down as much as 25 per cent of its holding, but it intends to remain "a significant long-term shareholder." Full-year revenues for 2013 were €2.6bn with earnings before interest, tax, depreciation and amortisation of €400m and net debt of about €800m, the company said. Analysts have ascribed an enterprise value of €5.8bn to the company, indicating the float could raise more than €1bn.

Yves Franco, an analyst at KBC Securities, said he expected the IPO to take place in February or March, and based his valuation on sector peers Luxottica and Fielmann. GrandVision would not comment on the valuation estimates.

HAL also owns a minority stake in Italian eyewear designer Safilo. JPMorgan Chase and ABN Amro are acting jointly on the IPO.

Bankers are expecting a rush of listings in the first quarter of 2015 as a backlog has built up due to recent market volatility. One banker estimated that the UK pipeline was 75 per cent higher than the same point a year ago, partly due to the UK general election in May, but investors are applying close scrutiny to valuations and growth prospects.

At the end of last year, companies which cancelled IPO plans included advertising agency ItaliaonLine, plus French business services company Spie and UK housebuilder Miller Homes.

PwC believes European IPO proceeds could reach £8bn in the period running up to the UK general election in May.

Mark Hughes, head of capital markets at PwC, said IPOs on mainland Europe finished last year with close to double the proceeds from 2013.

"As we look into 2015, we continue to see a strong level of preparatory activity by companies across Europe that are planning to access the markets," he said.

"There are some storm clouds on the horizon, however, that could unsettle the markets in the near term, such as falling oil prices, European deflationary concerns impacting the euro, as well as continued unrest in the Middle East, Russia and the Ukraine.

Martin Steinbach, EY's IPO leader for Europe, expects there will be about 50 to 60 European IPOs in the first quarter.

"The pipeline of IPO-ready companies is full, with many simply considering the best timing," he said. "There are a lot of conversations taking place about whether to be first, or whether to wait for others to test the waters. It looks like there are going to be a few early IPOs which may help kick-start activity in 2015."

Mr Steinbach said the depreciation of the euro since December could also help the European IPO market, as European shares became more attractive to investors holding US dollars.

"However, there has been increased volatility since the start of the year, largely due to the Greek elections and the terrorist attacks in Paris," he said. "Both will have an impact, but it is too early to tell if this will be long lasting."

Additional reporting by Nathalie Thomas

The eye-opening world of selling glasses online

Something that opticians have in common with hairdressers, nail bars and even tattoo parlours is that consumers cannot buy their products online, and must head to a physical store to have their eyes tested.

Described by one retail banker as "online resilience", investors will hope that the business model cannot be destroyed by cheaper online competition, in the same way that Amazon has made life difficult for retailers selling books and CDs.

"You can't have an eye test over the internet yet, but maybe you can in 10 years," said Theo Kiesselbach, chief executive of GrandVision.

With approaching 6,000 stores around the world, the company nevertheless recognises the power of online innovation to bring customers through the front doors of its 33 retail brands, which include Vision Express in the UK and GrandOptical in France.

"Some of our brands offer pre-eye tests on screen which give you an indication if you need to make an appointment, and this can be booked online," he says. "Some websites and stores also offer 3D augmented reality so you can look into the camera on an iPad and preselect frames," he added. "You can share the image on social media and find out what your friends think of your new glasses, but the eye test and fitting must happen in a store."

Rolling out these online capabilities across its stable of brands is one way that GrandVision is seeking to build a "united platform" to create efficiencies in its business, alongside standardised services such as lens-cutting and the combined purchasing power that a larger group can offer.

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