Along with a couple of understandably predictable discounters (Poundland, B&M), the IPO market of the past 18 months has delivered the improbable flotation of an off-licence franchise operator (Conviviality) and a re-engineered CTN (McColl’s). Who would have thunk it? Now it’s the turn of the supply base to deliver a few Stock Market surprises. Own-label poultry player Moy Park’s plans to float are at an “advanced stage,” according to City sources we spoke to; and while UB has been keeping its options open in pursuing a twin-sale process (IPO or private sale), we now understand that despite rumours of a sale to Kellogg’s, which resurfaced in the papers earlier this month, a float is emerging as the more likely route, and by the end of 2014, according to sources close to the deal.

City sources also suggest these suppliers will form the vanguard for a concerted IPO assault among suppliers, with a host of branded and own-label names from Weetabix and Quorn to Oscar Mayer and Refresco in the mix.

“The success of the Moy Park and UB flotations will be important in establishing if the stable reputation of food companies can make sense in a Stock Market context again”

Adam Leyland, Editor

The last UK supplier to float on the Stock Market was Premier Foods in 2004. It’s not exactly been a riproaring success, while old stalwarts Northern and Uniq have been driven from the Exchange as they too fell foul of the all-powerful supermarkets. In the meantime, Cadbury, of course, was gobbled up by Kraft, and then spun off with Mondelez - a pawn in an even bigger global finance game - leading the FTSE to feature just a handful of UK-based fmcg suppliers.

With the supermarkets now behaving like wounded animals as their own power comes under attack from the discounters, on paper this isn’t an ideal time to float. Or so you would have thought. Just look at Premier. It’s refinanced and neatly (if unenticingly) offloaded its Hovis operation. And if sales are flat, at least profits are creeping up. Yet its share price has been dragged down even further than the mults themselves.

But the market is hungry for new listings, and arguably, it’s the very paucity of options that has driven up the value of the remaining stocks. The success (or otherwise) of the Moy Park and UB flotations is likely, then, to be hugely important in establishing whether or not the stable, safe reputation of food and drink suppliers can make sense in a Stock Market context once again, having previously been more highly valued by private equity. Suddenly, steady as she goes is looking quite attractive for pension funds, as the low-growth economy is coupled with threats to previously rock solid dividends among the likes of Tesco on the retail side.

Prospective investors will like the fact that valuations for the current pack are generous - and the 12.5 times multiple being touted for Moy is high for an own-label poultry specialist. The question now is whether the creation of new options for investors will dilute valuations, or whether multiples in fact go up as investors discover anew the attractions of fmcg companies. If it’s the latter, who knows how many IPOs the next 18 months will deliver among suppliers?

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