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Mike Ashely is reportedly considering taking Frasers Group off of the stock market in a bid to take advantage of its recent period of strong growth.
According to The Telegraph, its recent performance combined with an intensive share buyback scheme has prompted speculation of delisting. It is thought that the move could also be designed to help incoming chief executive, Michael Murray, to make changes without having to consult investors.
The news comes after the retail group revealed its pre-tax profits increased 75% to £186m in its latest half-year results, largely driven by a strong reopening performance of stores post-lockdown and a continued growth in its online business.
As such the group said it believes it is on course to achieve a pre-tax profit of between £300m and £350m for the period ended 24 April 2022, on the basis there are no “substantial” lockdowns imposed in the UK, particularly over the Christmas period.
In addition, last week it revealed a new £70m share buyback scheme which will see it purchase up to 10 million shares up to the last trading day prior to its financial year end on 24 April 2022.
Currently, Ashley owns 68% of Frasers shares with city sources telling the paper that typically if the 75% threshold was met a move to take the business private would look “more likely”.
However, speaking to The Telegraph, Royal Bank of Canada’s equity analyst Richard Chamberlain said that despite the recent moves he doesn’t believe Ashley will “be in a rush” to delist the group.
He said: “They have surplus cash flow and are well under their three times net debt / underlying profits bank covenant. It helps to make their capital structure more efficient.”
