Deal Listings

IPO Spotlight: CVS Group

Oct 07 issue

According to CEO Simon Innes, CVS Group is the first veterinary business to be listed on the London stock market. Its initial public offering (IPO) on AIM valued the company at £105.7 million – good news for its venture capitalist Sovereign Capital, which netted a return of 11.9 times its investment.

‘One reason we went down the IPO route is that it gave Sovereign its exit, which it richly deserves after eight years,’ says Innes.

It might also be added that when it came to giving Sovereign an exit, there weren’t many other options for CVS.

‘We’re not aware of any potential trade buyer in the market,’ says Innes. ‘The only alternative [to an IPO] was to be sold to another private equity firm. Our preference was to go down the IPO route.’

Over eight years, CVS has acquired 45 practices, consisting of 128 surgeries, and now has turnover of £39 million. Although the IPO has raised no new money for the company, the management anticipates that debt finance and internal cash flow will be sufficient to keep it on the acquisition trail. Innes says CVS’ progress has been founded on maintaining the individual attributes of acquired practices, rather than forcing them into a corporate mould. The acquired businesses are even allowed to retain their original trading names.

‘It’s a consultative, non-dictatorial culture, where the business is driven locally rather than from the centre,’ says Innes. ‘We want people who own veterinary practices to come to us looking to sell, and they only want to sell to companies who they think will do the right thing and look after their staff.’

Naturally, Innes and his finance director Paul Coxon have also honed their skills when it comes to acquisitions, having spent almost £33 million on them to date.
‘We’re good at spotting the right businesses to buy, and the ones to avoid,’ Innes claims. ‘In fact, we’ve never bought a bad one or had to withdraw from a deal that’s gone beyond first base.’

Once acquired by CVS, the administrative burden on veterinary practices is considerably lightened. Innes explains: ‘We look after all the disciplines: IT, health and safety, HR, payroll and accounts, marketing, negotiating contracts with suppliers, legal matters and insurance.

‘Basically we take away all the distracting tasks vets have to deal with and leave them to get on with what they do best, which is treating animals and looking after their customers.’

Following the IPO, there are other advantages to joining the group: ‘We can now offer stock options to our staff, which gives them a real feeling of ownership in the business.’

Company established: 1999

Diss, Norfolk

£39.0 million (2006: £20.2 million)

£5.1 million (2006: £2.4 million)

Number of staff:
1,200, including 270 vets

Sum raised through IPO:
£92.7 million

Float price per share:

Current price:
234.95p (+14.6%)