B&M Bargains (BME) could be heading for the FTSE 100 after former private equity owner Clayton Dubilier & Rice floated another 120 million shares in the value retailer.

CD&R, which owned 60% of the chain before its 2014 float, has sold another 12% of B&M European Value Retail for 320p per share raising £384m.

The US private equity firm decided to increase the placement of shares in B&M from 100,000,000 shares to 120,000,000 shares “due to strong investor demand”.

The transaction takes its stake down to 17.4% of B&M’s issued share capital and means that over 50% of the firm is now publicly traded – the Arora brothers, founders of the business, own a combined 27% stake.

Crossing the 50% barrier means B&M can be including in the FTSE UK Indexes. It should enter the FTSE 250 as one of the index’s largest retailers and with a current market cap of £3.2bn is on the edge of possible inclusion in the FTSE 100. The smallest current member of the UK’s elite index is Tullow Oil with a market cap of £3.6bn.

It is thought that this week was the earliest opportunity for CD&R to sell a further stake in the firm under the conditions of its June 2014 IPO.

The release of the extra equity saw B&M slide 0.8% to 317.5p in early trading. However, the shares are 17.5% up from their 270p float price and have reached an all-time high of 329p yesterday.

In January, B&M reported a 4.5% like-for-like sales uplift in the UK for the 13 weeks to 27 December - slightly down on the 4.7% recorded for the 39 weeks to 27 December 2014.

The chain saw overall sales rise by 28.8% during the period to £527.9m, reflecting the rapid expansion of its store estate and its 2014 purchase of German chain JA Woll.

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