26/05/2017 - Shares in Alfa Financial (previously CHP Consulting) leapt as high as 425p in early trading and by mid-afternoon of its launch day the company was valued at £1.25 billion, which is substantially more than challenger banks like Shawbrook and Aldermore, and equivalent to half of Close Brothers, making Alfa the fifth most valuable tech stock on the LSE.
This is an amazing success for Alfa Financial, its founders, and for the UK asset finance industry that gave rise to such an astounding success. Executive chairman and co-founder Andrew Page, and CEO Andrew Denton, are believed to have gained over £250 million from the sale. The press estimated that some £227 million of that sum will go to Andrew Page, which together with the rest of his stake could raise him to the Top 200 wealthiest people in Britain.
It has been rumoured in the asset finance industry for some time that Alfa was building up to the IPO, hiring a new CFO from PwC’s Capital Markets team last year, and appointing directors from leading tech firms, but timing the float was always a challenge. In the event its tactics were perfect, Alfa had a small free float, meaning shares in the company were in short supply for would-be investors. A third of the institutions that placed orders in the IPO did not receive any shares, encouraging the rapid price rise when trading began. Alfa’s revenues for the extended FYE 31/12/2016 totalled £73.3 million, with an EBITDA of £32.8 million.
Could we see more asset finance software companies coming to market as a result? At these multiples . . . you’d think so.