Law firm DWF announces intention to float in UK’s largest legal listing
Law firm DWF yesterday announced its intention to float on the main market of the London Stock Exchange in what would make it by far the largest law firm to go public worldwide.
The firm would become just the sixth publicly traded UK law firm, the first to list on the main market and the first from within the UK’s top 25 firms by revenue to take the plunge.
Speaking to City PM chief executive Andrew Leaitherland said: “Premium segment, main market, it’s the biggie, it’s the Carlsberg advert, ‘if you were going to invest in a law firm this would be the one.’”
The firm would not confirm a valuation, but it is understood to be targeting a range of £400-600m, which would dwarf the largest law firm floats to date.
DWF, which was founded in Liverpool in 1977, has grown rapidly since Leaitherland took over as chief executive in 2006, growing revenue from £32m to £236m over the period and expanding from two offices in the UK to 27 offices in 14 jurisdictions.
England is one of a handful of jurisdictions that allows law firms to take outside investment or ownership.
The firm has worked with Magic Circle law firm Allen & Overy and audit firm Deloitte to develop a structure to separate the offices in England, Australia and Dubai, from those in jurisdictions such as Scotland, France and Germany which do not allow outside ownership.
DWF has also moved from a partnership model to a company structure, meaning that its partners will sell down their stake in the business in exchange for shares, although they will be restricted from selling those shares for a five-year period.
“We are selling the bare minimum we can frankly,” Leaitherland said of plans for a free float of 25 per cent of the firm’s shares.
“This is a medium-to-long term play, we aren’t doing it as a pay day opportunity, it’s a way of ensuring the business can deliver,” he said.
The firm also announced its half-year financial results yesterday for the six months to 31 October, with revenue growing 27 per cent to £157.2m from £123.7m at the same period last year while profit stayed largely flat at £20.9m, up from £20.4m.
Leaitherland said he was “not even remotely” worried about planned debt levels of one to 1.5 times earnings before interest, tax, depreciation and amortisation and he also said the timing of the float, with Brexit looming was of no concern.
“We are counter-cyclical business, with 65 per cent of revenue from litigation which puts us in a great position which ever way Brexit goes,” he said.
Stifel Nicolaus Europe and Jefferies International are acting as joint global coordinators and Zeus Capital is acting as lead manager.
Partners in DWF who have paid capital into the firm are expected to hold a majority of shares in the business post-admission.
Partners will be subject to a phased lock up which will expire on the announcement of the group's financial results for the year ending 30 April 2024.
Approximately 10 per cent of the shares are expected to be allocated to the trustee of DWF’s discretionary trusts.
DWF said this was intended to pre-fund its future equity needs in relation to partner recruitment and promotion from existing rather than new shares.
Partners will be paid on a fixed basis in the event of admission, with the remainder of partner pay primarily coming from dividend income from holding shares and in some cases performance-related bonuses.
The firm is chaired by Sir Nigel Knowles, who helped mastermind the rise of DLA Piper from regional Sheffield firm to one of the largest law firms in the world.
The firm’s clients include the Royal Bank of Scotland, Aviva plc, RSA Insurance, QBE Insurance, Santander Consumer, Tokio Marine Kiln, Telefonica and Wm Morrison Supermarkets.
If the firm does float, it will become the sixth UK firm to go public, with Gateley the first to list in 2015.