SPRINGFIELD Properties has this morning revealed plans to float on the stock exchange in a move which, if fully subscribed, would value the Elgin-based housebuilder at up to £90 million.
The family-owned company, which was established in 1956, is seeking to raise up to £25m from investors to fund its continuing expansion.
The initial public offering (IPO) is expected to value Springfield between £80m and £90m, depending on how much is raised.
The company plans to plough the bulk of the capital raised into the development of five villages around Scotland where, as well as constructing thousands of homes, Springfield will put the infrastructure for key community facilities in place. However the firm, which becomes only the second Scottish business to float this year, also aims to ramp up its presence in the affordable housing sector.
Springfield has doubled in since in the last five years, having grown its headcount to around 500 from 125 employees and turned over £110m in its most recent financial year. It is understood the float will result in up to 31 per cent of the company’s equity being taken up by outside investors.
The directors of Springfield, which is seeking to join the junior Alternative Investment Market (AIM), believe the company is well positioned for future growth.
Executive chairman Sandy Adam, grandson of founder Wilfred Adam, said the IPO will “provide us with finance to continue to grow the business”. He highlighted the opportunity to expand in the affordable housing market, where the Scottish Government has targeted building up to 50,000 homes to ease the country’s housing shortage, with funding in place. And, through the company’s private housing division, he noted Springfield’s involvement in the development of five new villages across Scotland, which will provide a total of 10,000 new homes. It is the development of these villages, in Dundee, Perth, Elgin, Stirling and Edinburgh, that is driving the need for capital. The development of each village is expected to require £8m to £12m per site.
Mr Adam said: “We like to think that we differentiate ourselves from our competitors because we are putting in the entire infrastructure for these villages, and all the community facilities that are needed. We are providing a really nice place for people to live and work. To do this, we need to put in the infrastructure, and we need the capital to so that – hence the IPO and the fund-raise.”
At August 31 the company had a land bank of around 10,500 plots, for which planning permission has been secured for more than 40 per cent. Springfield said this amounts to 17 years of development at current activity levels. It is currently active on 29 sites, and has a further 33 in its land bank for future development.
Asked whether the ongoing political uncertainty related to Brexit had come into the company’s thinking as it planned the flotation, chief executive Innes Smith said: “We have been uncertain for about nine years (since the recession) and we have grown our business every single year.
“There is always going to be a housing need – Scotland’s population has been forecast to increase seven per cent over the next 25 years. People need somewhere to live, and the houses we are building now are so much better than they were 20, 30 years ago. We need to improve our housing stock and I don’t see any uncertainty changing the need for people to live somewhere.”
Springfield is only the second Scottish firm to go public this year, following retailer Quiz .Mr Adam would like Scottish funds to invest in the IPO. “We’ve been round some funds in Edinburgh and we have had some positive feedback, but it is too early to tell,” he added.
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