Cheapflights grounds float plans
June 24, 2008: UK's online travel comparison group Cheapflights has said it was scrapping plans for a float in a stock market shaken by the credit crunch.
The firm has been looking at a stock market debut for more than a year after hiring a bank to explore a possible initial public offering (IPO) last May, as well as possible stake sales to private equity or strategic investors.
Cheapflights announced its interest in an IPO in the run-up to the listing of price comparison website Moneysupermarket.com last July, which had been expected to fetch more than £1 billion.
But the financial crisis has since sparked heightened market volatility and Cheapflights today said its existing shareholders decided to abandon plans, stating price and market conditions as the key factors.
John Clare, non-executive chairman, said: “In the light of the contrast between financial market conditions and our company’s continuing strong momentum, we have decided to conclude our process for the time being.
“Our investors remain strongly committed to the business,” he added.
Cheapflights, which also has US and Canadian operations, said that it was not relying on the plans to raise funds and stressed that the group has not shelved aims to expand further internationally.
Moneysupermarket.com has had a tough time since flotation last summer, with shares now 30% below their opening price of 170p.
Cheapflights was launched in 1996 by travel journalist John Hatt, who initially run the site from his attic. The site was bought by its current management in 2000, netting Mr Hatt an undisclosed fortune.
It boasted a record 8.4 million visitors to its sites in January - a peak month for the group - up from around 400,000 eight years ago. In its last set of publicly available figures, Cheapflights reported a leap in pre-tax profits from £600,000 to £3 million in the year to March 31, 2007, on turnover up 22% to £15.6 million.