Princes: what’s the strategy and the risks of IPO move?

Liverpool-headquartered Princes served up a healthy confidence boost to the ailing London IPO market last week as it unveiled plans to float on the exchange’s main market.

Additional details on share prices are set to be revealed in due course, but it is understood the group will be valued at £1.5bn if the flotation goes ahead.

London has become an unloved destination for IPOs in the past couple of years, with just three floats on the main market and 12 overall across the exchange so far in 2025, as companies either shelved plans or looked instead at Wall Street or European markets. It’s the weakest haul for the London Stock Exchange (LSE) in more than 35 years and led to the City slipping out the top 20 Bloomberg global rankings for the busiest initial public offering markets.

However, momentum seems to be building once more as the Princes news comes at the same time small business lender Shawbrook Group confirmed a £2bn float and followed cosmetics firm beauty tech floating last month.

If Princes gets away, it would be the first food flotation of note since Bakkavor listed at £1bn in 2017 – although THG, Virgin Wines, Deliveroo and, last year, Applied Nutrition have completed IPOs since then.

KPMG partner Chris Stott says a successful float would create a “wave of confidence” in the food sector and be helpful for M&A by highlighting an IPO as a potential viable route to exit once again. “It creates enhanced optionality in how to fund a business plan for owner managers and private equity alike,” he adds.

Clive Black, head of consumer research at Shore Capital, agrees a potential IPO of Princes is good news for the LSE, the UK economy and the food system, while Dan Coatsworth of AJ Bell says a company with energy and brand strength is “exactly what the UK stock market needs”.

What is Princes’ strategy? What does it mean for the wider F&B industry? And what are the risks?

A new era under Newlat

Princes was acquired for £700m by Italian dairy and pasta company Newlat, owned by the Mastrolia family, in the summer of 2024 following an on-again, off-again 15-month-long sales process run by former owner Mitsubishi. Newlat, which entered the UK with the acquisition of Ragu and Chicken Tonight manufacturer Symington’s in 2021, subsequently renamed itself as New Princes Group.

It will now hive off the operations comprising of five business units in foods, fish, Italian, oils and drinks that supply brands – such as Princes, Napolina, Crisp ‘N Dry, Delverde and Naked Noodle, as well as Branston, Batchelors, Flora under licence – and own label.

The new company lined up to float in London will be known as Princes Group and will not include the Diageo factory in Italy, the Kraft Heinz Italian baby food business or the Italian Carrefour supermarkets that have all been acquired by New Princes in 2025.

City sources expect Princes to raise £400m by issuing new shares to institutions and retail investors to create a war chest for a further acquisition spree.

Initial documents released by Princes ahead of an official ‘intention to float’ announcement said the group aims to act as a consolidator in the F&B industry across the UK and Europe, with a medium-term aim of adding £1bn-£1.5bn of revenues through deals. Executive chairman Angelo Mastrolia says Princes is “actively pursuing a pipeline of tangible M&A opportunities that will unlock new geographies, categories and capabilities”.

Dealmakers in the City expect almost anything to be on the table, from next-generation brands – following a similar path to Premier Foods (which has picked up Spice Tailor, Fuel 10K and Merchant Gourmet) – to more defensive M&A options with an eye to building capacity, scale and taking out costs.

Will Hayllar, global managing partner at OC&C, says: “Both of those routes have opportunities for Princes, given there is opportunity to regenerate and bring new culinary trends and formats into some of those big ambient categories.”

Read more:

• Princes buys Liverpool’s Royal Liver Building in £60m HQ investment

• New Princes Group buys Kraft Heinz’s Italian baby business

• New Princes unveils IPO plans for London Stock Exchange

• Princes Group confirms intention to float in London

Shaun Browne, managing director of consumer in Europe at Houlihan Lokey, adds: “Newlat has proven to be an efficient M&A machine in recent years. They’re getting a bit of a rhythm and building up a head of steam. They know what they’re doing, and they’ve got advisors who’ve done it before.”

Princes outlines its “typical targets” as underperforming companies, non-core assets owned by multinationals, those with strong synergy potential that can be easily integrated into the group, and businesses providing opportunities to further diversify the offering.

The group won’t be short of options as global players such as Unilever, Kraft Heinz and Hain Celestial all look to offload unloved food brands as part of ongoing portfolio optimisation.

New targets, new categories

Princes highlighted in its announcement last week five short-term and more than 25 long-term M&A targets, which it says could lead to entering new product categories.

Two assets in the immediate firing line – which would be potentially acquired from its New Princes parent – are the Diageo drinks factory and the Kraft Heinz baby food operation. The Italian Diageo business has been already rebranded as Princes Ready to Drink and this week showcased a range of Princes branded vodka, gin and rum and canned RTD cocktails at the Anuga trade fair in Germany. However, a Princes spokeswoman says there are no immediate plans to launch the alcoholic drinks in the UK or other markets.

Outside of deals, Princes set out modest organic sales growth targets of more than 3% a year to be achieved through growing the core products portfolio and expanding and diversifying the existing offering.

It set out a clear six-point growth plan, including pushing the Italian food offering further, expanding its oil range into new markets (including a new Napolina flavoured oil), modernising in ambient with new formats and product propositions, diversifying in seafood with new species and enhanced brand tiering, building capability in drinks with a focus on health and indulgence, and new category entry.

Potential investors may view a stock operating in a stable but unsexy part of the food market as a safe haven after being burned by the spectacular crashes in value at previously in vogue companies such as Beyond Meat and Oatly, which both floated in New York.

James Murray, co-head of EMEA consumer at investment bank Oppenheimer, says Princes could be seen as “an attractive defensive play” given its focus on consumer staples in both branded and private label. “Combined with the M&A agenda, it is overall an attractive package,” he adds.

Hayllar also notes the turbulence of the past five years of Covid and rampant inflation has demonstrated the resilience of traditional food businesses.

“The relative success and strong investment returns that a business such as Premier Foods has delivered over a sustained period of time, will be helpful to investors reappraising what a mid-cap food business can do,” he says.

“Premier Foods is not necessarily in the fastest-growing macro areas of food but is able to bring strong brands and capability to upgrade and modernise in categories and drive good growth off the back of that and gain share.

“Investors are often looking for comparisons, and the success of Premier creates a positive example of what a brand-led, national scale business could look like.”

Princes CEO Simon Harrison is keen to set out the strengths of the group in own label as setting the business apart from rivals in the market. With about 70% of the £2.1bn revenues generated from private label, Princes is the largest supplier of edible oils in the UK and also sells nearly a billion cans of food a year.

“Our position as a category champion is grounded in well-invested manufacturing, deep and longstanding relationships throughout our supply chain, and a highly skilled and motivated workforce,” Harrison says. “A listing on the London Stock Exchange is a natural next step in our journey.”

A diversified product portfolio also means the group can maintain a consistent performance throughout the year, minimising seasonal volatility, with soups performing strongly in the winter and chilled drinks coming into their own in summer, Princes boasts.

Almost £400m has been spent modernising the 23 factories in the UK, Europe and Mauritius, resulting in efficient production and “significant spare capacity for growth”.

Princes is aiming for at least £10m in cost savings in 2025, with an additional £10m or more next year, and is outlining potential synergies of £30m by 2030.

Governance and control questions

Despite the ambitious plans and clear strategy, the challenging macro-economic environment means the move is not without risk.

“The main obstacle [to the float] is there is still an inherent nervousness amongst institutional investors over consumer spending,” points out Browne. “You’re seeing that across all M&A transactions in the consumer space. Buyers are worried that consumers are feeling the pinch. Tax rates are going up, unemployment is going up, National Insurance is biting, and consumers are tightening their belts.”

One sceptical City source worries about what will happen if the Princes share price trades down.

“There is this great ambition of using equity to make acquisitions, but as soon as you don’t hit your forecasts, there’s a loss of confidence. If it ends up trading down at five or six times EBITDA, where do you go?

“At that point you get stuck in a doom loop. It’s harder to do deals as you can’t raise equity at the right price, and everything’s diluted. You are then at the hands of the sceptical investors. The track record in food is not great. Which is why there are very few publicly listed food companies and why most that have tried, whether it’s Real Good Food or Finsbury Food Group, have come a cropper.”

Another dealmaker warns many food businesses that have floated in the past have not enjoyed being in the glare of the public markets. “It’s a case of be careful what you wish for,” he says.

THG founder and CEO Matthew Moulding has expressed regrets over listing the ecommerce group, saying the experience “sucked from start to finish”. Moulding has battled worries over governance because of his controlling position over THG. A City source points out Mastrolia’s controlling stake in Princes could trigger similar problems.

“Markets don’t tend to like the fact that you’ve got a public company that’s controlled by somebody else,” he adds.

With a Budget still to come in November, it is an uncertain time to be plotting an IPO, but Princes highlights the strengths of its management team, which has an average of 20 years’ experience working in the F&B industry.

Mastrolia says: “We believe Princes is exceptionally well-positioned to deliver sustained organic growth and long-term value creation for shareholders and we are ready to propel Princes Group into its next stages of growth.”

Princes will perform well if it meets its new investors’ expectations, Black predicts. “The firm struggled to find trade interest when it was part of Mitsubishi, so it will be interesting to see if under the present management such caution can be proved wrong.”