ISS prepares for stock market launch

The IPO is expected to value the company at between 40 and 50 billion kroner

Feb 18, 2014

Danish outsourcing giant ISS has announced this morning that it is seeking a stock market flotation – a move that is expected to generate eight billion kroner in proceeds through the issue of new stock.

The move would be one of the largest IPOs (initial public offerings) since the financial crisis took hold. It will also be ISS's third attempt as similar plans in 2007 were shelved due to the global financial crisis, and again in 2011 because of the instability in the aftermath of the tsunami in Japan and the Arab Spring.

“We have focused our business on the delivery of our market-leading value proposition. Progress in the implementation of our strategy since 2011 is evident in our focused business platform, organic growth, resilient margins and strong deleveraging profile,” Jeff Gravenhurst, the head of ISS, said in a press release.

The IPO will also mean that the US investment bank Goldman Sachs, and the Swedish capital fund EQT will be offloading some of their stock. The Ontario Teachers' Pension Plan and KIRKBI Invest A/S will not be selling any shares in connection with the IPO.

Ready in March
ISS expects that a flotation prospectus, which lets investors gain an insight into the company, will be ready by the end of February or the beginning of March, and that the group should be listed by the middle of March.

“The intended IPO is expected to support our operational strategy, advance our public and commercial profile, provide us with improved access to public capital markets and a diversified base of new private and institutional shareholders – both in Denmark and internationally,” Gravenhurst said.

Morten Langer, the head of the business news letter Økonomisk Ugebrev, contended that move spelled good news for ISS and the Danish stock market in general.

“The move will be a help to the Danish stock market, which benefits from the listing of large companies. “It will be interesting to see if the major investors will give ISS stock a good look which they likely will because, as opposed to the more fluctuating Maersk and FLSmidth stock, the ISS stock will be more stable,” Langer told The Copenhagen Post. “Previously, debt has been stumbling block for ISS to make the IPO transition and it will undoubtedly use the proceeds to further reduce its debt.”

Last year, ISS generated 78.5 billion kroner in revenue and the IPO is expected to value the company at between 40 and 50 billion kroner – a value comparable to TDC and Pandora, which revealed solid financial results today.

ISS, which employs 500,000 people worldwide, was named the world’s best outsourcing company by the International Association of Outsourcing Professionals last year.