Watches of Switzerland shares surge after London IPO

Watches of Switzerland got off to a solid start in its first day of trading on the London stock market as shares surged higher after being priced at the top end of their range.

Britain’s biggest watch retailer saw shares lift 15% to 310.5p in conditional dealings, having priced its shares at 270p each, valuing the group at £647 million on its stock market debut.

The opening price was near the upper end of the 250-277p range set.

Watches of Switzerland – which sells luxury brands such as Rolex, Richemont’s Cartier and Swatch Group’s Omega – said 34% of its share capital was floated immediately in the initial public offering (IPO).

A so-called over-allotment option would add a further eight million shares being traded, increasing the total to 37.4% of the company.

Brian Duffy, chief executive of Watches of Switzerland, said: “Today marks the next phase in our growth story.

“I am delighted by the reaction we have received from the market to our business and the significant opportunities that lie ahead.”

The group, which was previously more than 90% owned by Apollo Global Management, aims to use the money raised from the float to cut debt.

It has also previously said the flotation will boost its profile and brand recognition, while also allowing it to recruit and retain key management and staff, and creating a more liquid market for shareholders.

The group held a 35% share of the UK luxury watch market by sales value in 2018.

Its revenues jumped 22.5% to £773 million in 2018-19, with UK like-for-like growth of 10% over the year.

Fourth quarter UK comparable sales jumped 12.7%.

It marks the latest London IPO, with rail app business Trainline confirming plans on Wednesday to raise £75 million in capital to fund its expansion plans when it floats next month.

The Trainline IPO is expected to be one of the largest in the UK this year, with reports last week that the company is eyeing a £1.5 billion valuation.

But market experts said life on the stock market can be a roller-coaster ride for some newly listed companies, with Aston Martin’s shares recently hitting a record low after a disappointing float last October.

On the prospect for Watches of Switzerland, Markets.com chief market analyst Neil Wilson said: “As we’ve seen this year, IPOs can be a rough ride for shareholders and management.

“Hopefully for the management and buyers it won’t turn out to be another turkey like Aston Martin – one feels the omens are better for this one.”