HRG To Go Public By Month's End

Hogg Robinson Group formally has announced its long-signaled intention to return to the stock market. The global travel management company, or "international business support services group providing value-added services to the global corporate travel market," as it now styles itself, expects to float on the London Stock Exchange by the end of this month. Joint sponsors of the offering are Lazard and Merrill Lynch.

Analysts have predicted that the flotation will value HRG at $1.14 billion, roughly double its worth at the time the company quit the market in 2000. The company said it intends to raise $361 million in new shares under the offer "to refinance part of its current indebtedness, creating an appropriate capital structure to pursue its business plan and growth strategy." The new shares also will fund a one-off payment of $54 million into the company's pension fund.

HRG exited the stock market in a management buyout funded largely by investment fund Schroder Ventures, now Permira Funds. Venture companies led by Permira, which is expected to sell its stake immediately at or after flotation, own close to 90 percent of HRG.

When HRG quit the market, it cited two main reasons for its exit. The first was a lack of interest from investors in mid-cap companies and the other was the distraction of being a publicly quoted company, especially its vulnerability to hostile takeovers.

Group CEO David Radcliffe said yesterday that HRG de-isted during the dot-com boom when such "classic" companies as his were being overlooked, and that much has changed since. "We were a mixed bag of businesses, with our revenue split between commission and fees, and we had several non-travel interests," he said. "Since then, we have completely refocused: We have divested nontravel businesses and invested in travel ones. We are also going back into a market that is much more interested in companies that are focused and service-based. I believe our clients will welcome the profile we get as a listed company and the firepower it gives us," said Radcliffe, adding that HRG is likely to increase its pace of acquisitions.

Yesterday's announcement from HRG reveals the company's turnover in the first quarter was $564 million, producing EBITDA earnings of $84 million and an operating profit of $69 million. Turnover, EBITDA and operating the previous year were $514 million, $70.3 million and $57 million respectively.

HRG also noted that its top 15 clients account for 15 percent of its revenue, more than 700 of its clients spend more than $5.7 million annually on travel and that it serves 225 clients in more than one country, of which 115 are served in more than five countries.