Midwich managing director Stephen Fenby reveals brave route to stock market flotation
PUBLISHED: 06:30 13 July 2016 | UPDATED: 09:52 19 July 2016
Archant Norfolk Photographic © 2016
Taking a business on to the stock market is a brave step for any managing director. But Midwich made the leap in May, in the run-up to the EU vote. SABAH MEDDINGS reports.
Seven weeks before the European Union referendum, many businesses were holding their breath and searching for some end to the uncertainty.
But Diss-based audio-visual distributor Midwich was preparing on the biggest step in its 37-year history, and awaiting the results of an Alternative Investment Market (AIM) flotation.
Its 45% initial public offering (IPO) saw 36.2 million ordinary shares sold at 208p each, raising £75m to pay off debts and hand existing shareholders a £49.2m windfall.
For managing director Stephen Fenby – who has led the company through ambitious growth since joining in 2004 – it meant the company, which already operates in six countries, could expand its international network.
Now, more than two months on, he can reflect on taking his company public, the timing of the IPO, and standing firm during the fallout of Brexit.
“We got to the point when an IPO seemed the next logical route,” said Mr Fenby. “Now we are in a good, lean position with plenty of firepower for future acquisitions.
“We would like to grow in Europe first, and then look at the Far East and Australian market.”
Mr Fenby’s journey to the top of Midwich followed an unusual route. The 52-year-old joined the EDP/EADT Top100 firm from Deloitte - where Midwich was one of his clients - to become finance director and shareholder.
The move signalled a switch from advising businesses on financial issues to taking a turn in the driving seat himself.
In 2010, the father-of-two became managing director and, in 2014, took a majority shareholding in the firm.
With his influence the company started on an aggressive growth trajectory, snapping up 10 businesses in 10 years, and growing its turnover from £130m when he joined to £314m last year.
Taking the business into public ownership followed a series of management buyouts, leading to speculation over what was coming next.
“People were wondering if there was going to be a trade sell,” said Mr Fenby. “There have always been rumours about people wanting to buy us. But I think we have got something really special in Midwich. We wanted to stay as an independent company.”
New shareholders after the May 6 flotation include blue-chip investors such as Standard Life – which has a 5% stake – and Axa.
Others are smaller shareholders, with the rest owned by the management team and employees.
Mr Fenby retains a 28% interest, and said he had no short-term plans to sell down any further shares.
The IPO timing, just weeks before the Brexit vote on June 23, was not deliberate, said Mr Fenby, although he added they did have an eye on the date.
“Probably in hindsight we were very fortunate to have done it then,” he said. “I suspect there won’t be many IPOs for a little while.”
The company has made its foray into public trading amid a turbulent few weeks on the stock market.
While shares opened at 208p, they rose in the following week to a high of 275p. The days after Britain’s vote to leave the EU saw shares slide to a low of 199p before climbing gradually to 205p by yesterday.
However Mr Fenby said the business – of which 30-40% is outside the UK – was well insulated from adverse effects.
“We are probably quite well placed to deal with the issue of exchange rates or trade because [the companies] are working pretty independently in each country,” he said.
“The AV industry has been quite resilient in the last 10 years even during the last recession. People were still spending on AV products. They are not ‘nice to haves’, they are part of running an efficient and effective business.”
About the company
Midwich specialises in supplying trade-only customers with audio-visual (AV) equipment such as screens, consumer electronics and document management, and has distributors across Europe and Australia.
Its specialist nature gives it an advantage over international competitors, who tend to be fragmented, according to managing director Stephen Fenby.
“You tend to find quite a number of small distributors who are specialised or quite small, and also some broad businesses which carry AV as part of their portfolio but don’t have a particular focus,” he said.
Under Mr Fenby’s stewardship the company has expanded into six countries, and ambitious growth plans will include more jobs both locally and internationally.
Since he joined in 2004, staff numbers have also grown, from 130 to 480 and this trajectory is set to continue.
Just last week the firm announced it had taken on 30 new staff across the business, including a brand campaign manager, a general sales manager and logistics coordinator.
The IPO also offered share incentives to staff who had been with the company for more than a year.
“We had broadened the shareholder base over the last few years anyway,” said Mr Fenby. “It is something I would like to continue to do: giving everyone a stake in the business and rewarding them.”
However, being a listed company would not significantly change the day-to-day running of the company, he said, but added additional people to interact with, such as stock brokers. “We have run our business in a bit of a vacuum for the last 10 years. We have not had to present our business, so meeting outside investors was an interesting process.”
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