A software provider to the motor finance industry is eyeing a stock market float that is expected to value it at more than £800m, making it the biggest technology listing for two years and putting its founder in line for a huge windfall.
Alfa Financial Software, which focuses on the $5.4 trillion asset finance industry, plans to float on the premium segment of the London Stock Exchange next month.
It comes amid a dearth of flotations in London since last year’s Brexit vote, and will mark the biggest listing by a tech business in the UK since Sophos, the cyber security group, made its £1bn market debut in June 2015.
Alfa counts Barclays, Mercedes-Benz and Bank of America as customers, supplying firms with software used to manage loans to finance the purchase of anything from office equipment to cars, planes and satellites.
Its initial public offering (IPO) is likely to draw attention because there are increasing fears that the rapidly growing motor finance industry, which is a focus for Alfa, is a bubble that is poised to burst.
Last month, the Financial Conduct Authority launched an investigation into car financing, fuelling speculation products may have been mis-sold.
The firm is aiming for a 25pc free float, meaning the IPO will result in a roughly £200m windfall for Andrew Page, its chairman and co-founder, and Andrew Denton, the chief executive. Alfa is 94pc owned by holding company CHP, in which Mr Page has an 89.7pc stake and Mr Denton holds the remaining 10.3pc. Other members of 250-strong workforce also hold shares in Alfa.
But Mr Denton insisted the IPO was not about cashing out, noting that Alfa was only selling the minimum required for a premium listing.
“This is about setting the company up for the next stage of its growth,” he said, adding the float should raise Alfa’s profile, helping it to grab a bigger slice of the market and attract talented staff. “It’s not about selling down at all.”
Alfa’s main software product is “very popular” in the auto finance industry, Mr Denton said.
In the UK, personal contract purchases (PCPs) have overtaken car loans and hire purchase as the most popular method of acquiring a car, as more and more consumers turn to financing deals instead of buying vehicles outright. But there are mounting worries that carmakers and other auto financing firms could be hit with big losses because PCPs have been incorrectly valued.
Despite those concerns, Mr Denton insisted that the market was “very robust”. He added: “What we absolutely see going forward is that people will want to buy things in instalments.”
The number of companies floating in London has dried up in recent months, a lull that has been blamed on the uncertainty caused by last June’s vote to leave the EU. There were also worries the general election in a month’s time could deter companies from listing.
However, Mr Denton said management had not been put off by political developments and that feedback from City fund managers had encouraged them to push ahead with the IPO.
“We’ve been very, very happy with the reception that we’ve had from investors,” the Alfa chief said.