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Dr Martens treads close to FTSE 100 as reshuffle looms
17th Feb 2021 10:03
(Sharecast News) - Dr Martens could boot its way straight into the FTSE 100 after the footwear brand's shares surged following its successful flotation.
Shares of Dr Martens have leapt by a third since the company's initial public offer in late January, valuing the group at about £5bn. It is one of a series of recent IPOs that also included FTSE 250 candidates Moonpig and Bytes Technology.
Dr Martens is in the running to replace Pennon, the owner of South West Water, when the quarterly FTSE 100 reshuffle is announced on 3 March. Dr Martens is vying with engineering group Weir, whose market value is £5.1bn, to displace Pennon, which is valued at £3.9bn.
If Dr Martens doesn't break into the index of top shares it appears to have assured itself a place in the FTSE 250 list of midsized corporates. If so, it is likely to be joined by Moonpig, the online greetings company, and Bytes, the cloud storage and security group, which also had successful flotations in the past two months.
Dr Martens has come a long way from its roots in the 1960s as a privately owned business selling comfort footwear designed by its eponymous German founder. The air-cushioned boots and shoes were adopted by skinheads and a succession of youth cults including punks, rude boys and grunge to become an edgy UK fashion brand.
The business was owned by the Griggs family, which licensed the design in 1960, until 2013 when they sold to private equity firm Permira for £300m and kept a 10% stake. The company's IPO received strong demand but its fortunes have waxed and waned with trends while outside the spotlight of the public market.
Susannah Streeter, an investment analyst at Hargreaves Lansdown, said: "The bootmaker made famous for dressing subversive types has gone full City style with a successful IPO, a buoyant share price and a market capitalisation of £5bn.
"It may now be basking in the style spotlight but fashion is fickle and that could reflect in its share price down the line. Widening its footprint of styles is likely to be the path trodden in the future, but that also risks diluting the core brand."
Weir is in contention to rejoin the FTSE 100 after selling its oil and gas division to Caterpillar in October and switching its focus to mining. Its shares have roughly tripled in value since March 2020 compared with a 40% rise in the FTSE 250 as investors have bet on a mining revival.
Pennon is sitting a big pile of cash after selling its waste management business in 2020 but has not offered shareholders much to be enthusiastic about. Moonpig and Bytes have got investors excited over the shift to online shopping and working wrought by the Covid-19 crisis.
Streeter said: "Three newly listed star players are leading contenders to land coveted FTSE positions. Dr Martens is set to stomp into the FTSE 250 but has an has outside chance of taking the next step into the FTSE 100. Tech newcomers Moonpig and The Bytes Group have also floated into potential FTSE 250 territory."
The FTSE 100 reshuffle is managed so that companies do not move in and out too often. To be relegated a company's market value must be below that of the top 10 companies beneath it and to gain promotion a FTSE 250 company's valuation must exceed that of the bottom 10 in the FTSE 100.
Shares of Dr Martens have leapt by a third since the company's initial public offer in late January, valuing the group at about £5bn. It is one of a series of recent IPOs that also included FTSE 250 candidates Moonpig and Bytes Technology.
Dr Martens is in the running to replace Pennon, the owner of South West Water, when the quarterly FTSE 100 reshuffle is announced on 3 March. Dr Martens is vying with engineering group Weir, whose market value is £5.1bn, to displace Pennon, which is valued at £3.9bn.
If Dr Martens doesn't break into the index of top shares it appears to have assured itself a place in the FTSE 250 list of midsized corporates. If so, it is likely to be joined by Moonpig, the online greetings company, and Bytes, the cloud storage and security group, which also had successful flotations in the past two months.
Dr Martens has come a long way from its roots in the 1960s as a privately owned business selling comfort footwear designed by its eponymous German founder. The air-cushioned boots and shoes were adopted by skinheads and a succession of youth cults including punks, rude boys and grunge to become an edgy UK fashion brand.
The business was owned by the Griggs family, which licensed the design in 1960, until 2013 when they sold to private equity firm Permira for £300m and kept a 10% stake. The company's IPO received strong demand but its fortunes have waxed and waned with trends while outside the spotlight of the public market.
Susannah Streeter, an investment analyst at Hargreaves Lansdown, said: "The bootmaker made famous for dressing subversive types has gone full City style with a successful IPO, a buoyant share price and a market capitalisation of £5bn.
"It may now be basking in the style spotlight but fashion is fickle and that could reflect in its share price down the line. Widening its footprint of styles is likely to be the path trodden in the future, but that also risks diluting the core brand."
Weir is in contention to rejoin the FTSE 100 after selling its oil and gas division to Caterpillar in October and switching its focus to mining. Its shares have roughly tripled in value since March 2020 compared with a 40% rise in the FTSE 250 as investors have bet on a mining revival.
Pennon is sitting a big pile of cash after selling its waste management business in 2020 but has not offered shareholders much to be enthusiastic about. Moonpig and Bytes have got investors excited over the shift to online shopping and working wrought by the Covid-19 crisis.
Streeter said: "Three newly listed star players are leading contenders to land coveted FTSE positions. Dr Martens is set to stomp into the FTSE 250 but has an has outside chance of taking the next step into the FTSE 100. Tech newcomers Moonpig and The Bytes Group have also floated into potential FTSE 250 territory."
The FTSE 100 reshuffle is managed so that companies do not move in and out too often. To be relegated a company's market value must be below that of the top 10 companies beneath it and to gain promotion a FTSE 250 company's valuation must exceed that of the bottom 10 in the FTSE 100.