Hotel Chocolat’s concept of affordable luxury proved to be a smash hit with investors as shares soared 28% to 190p on its AIM debut on Tuesday, adding almost £50m to the £167m valuation in the process.
The chocolatier raised £55m in a 148p a share placing last week, which was at the upper end of expectations ahead of the IPO. Founders Angus Thirlwell and Peter Harris, who retained a majority 67% stake, bagged a shared £43.5m payday from the float and will invest £12m in shop opening, manufacturing and the website.
The stock’s popularity continued into Wednesday, rising another 11.3% to close at 211p (reaching highs of 223p during the day), valuing Hotel Chocolat at about £238m. Retail analyst Nick Bubb said it was clear many investors were scared of missing out on another Fever-Tree, the premium mixer brand which has been one of AIM’s darlings, rising more than 250% since its 2014 flotation. “It remains to be seen how many Hotel Chocolat core investors were just ‘flippers’, but the trading volume on Tuesday was only four million shares, little more than 10% of the 37.5 million placing last week, which is a good sign,” he added. “However, day one success doesn’t necessarily guarantee a successful IPO (look at what happened to Boohoo and AO.com).”
The success of the flat white coffee launch at Greggs, as well as the overhaul of the rest of the menu and its stores, helped the high street baker to a 3.7% like-for-like sales rise in the first quarter to 7 May. Although it represented a slowdown on the 6% increase a year ago, the share price jumped 2.7% to 1,097p on Monday - and is up 3.9% for the week at the time of writing.
Clive Black at Shore Capital hailed the performance as “robust” against a backdrop of tough conditions on the UK high street. “Recent trade, against weak high street footfall and a tough comparison of 6%, is impressive as Greggs sustains its heritage in a more modern and sustainable context. There is much more for this group to go at to deliver onward earnings and dividend growth.”
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