Biffa’s £270m float faces price cut in bid to avoid scrapheap

One of the UK’s biggest waste disposal groups faces having to slash the price of a public share sale in a last-ditch bid to avoid becoming the second British company this week to consign flotation plans to the scrapheap.

Sky News understands that the board of Biffa will meet advisers later on Wednesday to decide whether to cut the price of a stock market listing that was due to see its shares begin conditional trading on Thursday.

Attempts by investment bankers to drum up enough demand for the shares on offer have so far been unsuccessful, according to insiders, although insiders say that Biffa executives are determined for the flotation to go ahead.

Biffa announced plans last month to raise £270m from the listing, which would be among the largest since the UK's vote to leave the European Union.

If the price at which the shares are sold is reduced significantly, or the IPO is abandoned, it would send a further chill through an already jittery market for public company listings.

Earlier this week, Pure Gym Group said that it was abandoning a flotation because of "challenging IPO markets".

Bankers say that soaring UK equity markets - with the FTSE-100 index reaching a record high this week - are painting a misleading picture because of the weakness of sterling.

If Biffa does call off its flotation, it could renew the appetite of several prospective buyers of the company, including at least one peer based in south-east Asia.

Biffa, which was forced into an emergency financial restructuring in the aftermath of the banking crisis, has already drawn interest from potential buyers during the last year, including Keppel Corporation, a Singaporean rival, and Apollo Management, the buyout firm.

In recent months, however, it has been focused on going public as a means of accelerating its expansion.

The company, which employs more than 7,000 people, serves 2.4 million households across the UK and manages more than 6 million tonnes of waste annually.

In its 2016 financial year, Biffa recorded underlying pre-tax profits of £122m on revenue of £927.5m.

Roughly 10% of last year's revenues came from energy production from landfill gas and food waste.

Biffa operates one of the most recognisable fleets of branded vehicles in the country, with 2,500 waste collection trucks, some of which are powered by biofuel from waste cooking oil.

Once part of water company Severn Trent (Other OTC: STRNY - news) , Biffa was spun out into a separate listed business before being taken over by a consortium comprising high street lender HBOS, Global Infrastructure Partners and Montagu Private Equity just before the financial crisis.

In 2008, Biffa was valued at £1.7bn including debt, but a restructuring deal agreed in 2012 wiped out much of the company's borrowings and saw senior lenders take control of the company.

Current customers in the commercial market include J Sainsbury (Other OTC: JSAIY - news) , Royal Mail (LSE: RMG.L - news) and Pret a Manger, while in the domestic rubbish collection sector, Biffa is the second-largest player behind Veolia.

Biffa's main shareholders are now the hedge funds Angelo Gordon, Avenue Capital and Sankaty Advisors, although Ian Wakelin, the chief executive, and his senior management team also own shares.

The executives have scrapped plans to sell shares worth £30m in the IPO after feedback from institutional investors.

Biffa declined to comment.