Hogg Robinson Group this week announced plans for a public offering in the next month on the London Stock Exchange that it expects to initially raise about £ 190 million ($362 million). The proceeds would pay off about half of the 90 percent of HRG now owned by venture capitalists led by Britain's Permira, as well as roughly half of the remaining 10 percent of shares owned by 20 company managers.
HRG would join Australia's FCmand American Express Business Travel as major publicly traded multinational travel management companies, although those entities represent smaller portions of their listed parent firms, respectively Flight Centre Ltd. and American Express Company. Formerly traded on the Nasdaq, Navigant International was recently acquiredby privately owned Carlson Wagonlit Travel. A fifth major multinational competitor, BCD Travel, also is privately owned.
HRG anticipates its total market valuation to be more than £ 600 million ($1.14 billion) after the offering, or £ 450 million ($858 million) excluding debt. HRG confirmed press reports indicating that the company generated about £ 290 million ($553 million) of revenue in the fiscal year ended 31 March. Earnings before interest, taxes, depreciation and amortization were £ 44 million ($84 million) in the same period, with a pre-tax operating profit of about £ 37 million ($71 million).
In an interview with The Transnational, HRG chief executive David Radcliffe today said the offering would further equip the company to make acquisitions, particularly in the United States. HRG last year acquired Sea Gate Travel Group in New Yorkand this year added Robustelli World Travelof Connecticut. Both groups joined the former BTI Canada under former Sea Gate executive Tom Gleason, who is now CEO of HRG North America.
Radcliffe said HRG is talking to "a number of well-known players," but would not disclose whether it was looking at midsize or larger firms. "There does seem to be a lot of positive interest from potential sellers," he said. Told that some U.S. multinational corporate travel managers perceive HRG's U.S. holdings to be too small, Radcliffe accused his competitors of spreading that line and said, "I haven't heard that for a few months. You'll see a major global client signing shortly, and I think that would shut everyone up. We have been invited in on all major global tenders, and we're now considered one of the big four out of the States."
Radcliffe said that only about 30 percent of HRG's revenues are derived from its home market in the United Kingdom, but would not disclose breakdowns from other regions. The company last month acquired BTI Czech Republic, BTI Polska of Poland and BTI Slovakia, supporting existing wholly owned operations in Hungary and Russia. According to Business Travel News, HRG said it "serves 225 clients in more than one country, of which 115 are served in more than five countries."
The company said the public flotation would enable a one-time payment into its pension fund of £ 28.5 million ($54 million). HRG had been traded publicly prior to 2000, when the company was acquired by Permira, other investors and management.
Meanwhile, HRG late last month announced the acquisition of British consulting firm Ian Flint & Associates, appointing founder Ian Flint as head of global consulting. Flint reports to the Hogg Robinson Group board. HRG in April bought Partnership Travel Consulting in New Jersey, appointing PTC founder Andrew Menkes as president of North America consulting.
Like competitors American Express, BCD Travel and Carlson Wagonlit, HRG is building its consulting division as part of an ongoing transition that is taking TMCs beyond transaction processing and into broader travel spend management services. BCD Travel this week said it hired IBM's Mark Williams, a former president of the Association of Corporate Travel Executives, as vice president of consulting.