Virgin Wines latest UK firm to announce IPO

Saleha Riaz
·3-min read
Virgin Wines operates two main subscription schemes, which together accounted for approximately 73% of its core wine revenue last year. Photo: Getty
Virgin Wines operates two main subscription schemes, which together accounted for approximately 73% of its core wine revenue last year. Photo: Getty

Virgin Wines, which describes itself as one of the UK's largest direct-to-consumer online wine retailers, is the latest startup to announce plans to float on the London Stock Exchange (LSEG.L). It plans to do so around 2 March in a move that would reportedly value it at £100m ($140m).

The company sells “award-winning and largely exclusive premium wines” through its WineBank and Wine Plan subscription schemes as well as on a pay-as-you-go basis.

Chief executive Jay Wright said: “We have enjoyed strong, consistent growth recently resulting in the group delivering more than 1 million cases of wine to consumers during 2020. We have a clear strategy to continue this growth over the coming years."

The company is likely to have been boosted by consumers shifting to online amid the pandemic, which has taken a particular toll on businesses that have a physical presence.

Virgin Wines was established in 2000 as part of the Virgin Group owned by Richard Branson. It was acquired by Direct Wines in 2005. In 2013, Direct Wines sold the business to the then current management team, backed by private equity, for £14m.

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Virgin Wines operates two main subscription schemes, which together accounted for approximately 73% of its core wine revenue for the year ended 30 June 2020.

As at 31 December 2020 Virgin Wines had approximately 169,000 active customers of which some 147,000 were members across its subscription schemes.

Its subscription schemes help drive high levels of repeat purchases, it explained, "demonstrated by a customer retention rate of 89% and a sales retention rate of 112% in the year ended 30 June 2020."

The current total “addressable, off-trade market” for wine specialists such as Virgin Wines was estimated to be approximately £2.4bn per annum in 2020, it said.

This market “is anticipated to be buoyed by consumer trends that include an increasing shift toward premiumisation in the alcoholic beverage market, consumers increasingly purchasing alcohol online, and increasing consumer spend on 'Food & Drink' based subscriptions,” it added.

For the company's IPO, Liberum Capital Limited is acting as nominated adviser and sole broker.

2021 is turning out to be a big year for IPOs in the UK. Online greeting card retailer Moonpig (MOON.L) saw its shares surge 25% earlier this month as it made its £1.2bn stock market debut.

Companies are looking to make the most of stock market optimism amid a global effort to rollout COVID-19 vaccines. Dr Martens (DOCS.L) launched on the stock market last week with a £3.7bn valuation.

And food delivery company Deliveroo could be announcing its plans to float on the stock market early next month, hoping to raise more than £2bn.

Virgin Wines' IPO "is a clear indicator of the ecommerce market's ongoing growth, particularly in the food & drinks sector, with Deliveroo also gearing up to float next month," noted Charles Bond, partner at Gowling WLG law firm.

"We are seeing an encouraging increase in new enquiries for floats in London, both from domestic and international businesses, and it seems investors are now ready to engage fully with the capital markets again," he added.

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