Former Tesco Boss Leahy Eyes £1bn B&M Float

B&M Retail, one of Britain's fastest-growing discount retailers, is drawing up plans for a flotation that would involve a return to the London stock market for Sir Terry Leahy, the former Tesco (Other OTC: TSCDF - news) boss.

Sky News can reveal that Clayton Dubilier & Rice (CD&R), the investment firm which owns 60% of B&M, has begun mulling a public listing less than 12 months after striking a deal to take control of the company.

No firm decision has been taken to pursue a flotation, but sources close to the situation confirmed on Friday that CD&R could decide to appoint investment bankers to manage one before the end of this year.

An initial public offering of shares would take place in 2014 under one plan being considered.

If the company does opt to go ahead, a listing would see Sir Terry, the chairman of B&M, re-emerge at the helm of a London-listed business more than two years after stepping down as chief executive of Tesco.

The contemplation of a float, which would value the discount chain at well over £1bn, is rapid even by the standards of private equity firms renowned for their 'quick flips' of companies under their ownership.

The fact that CD&R is examining the prospect underlines the stellar financial performance of B&M, which recorded a 71% jump in pre-tax profits to £88.3m last year and which is understood to have enjoyed a successful 2013.

Its major growth spurt occurred under the ownership of three brothers - Bobby, Robin and Simon Arora - who took the chain from fewer than 20 shops to more than 350 today.

B&M employs nearly 15,000 people and is one of a number of retailers which have taken advantage of the downturn in the economy after the financial crisis to sell food, toys and homewares at bargain prices.

Poundland, which is controlled by Warburg Pincus, another private equity group, this week interviewed eight investment banks as it pursues a stock market listing likely to value it at more than £700m.

A number of other investment groups, including KKR, are said to be interested in pre-empting a Poundland flotation by tabling offers to buy the company.

Poundland is chaired by Andrew Higginson, who was a senior executive at Tesco during Sir Terry's stint at the helm.

Sir Terry transformed Tesco into the world's second-largest retailer, behind Wal-Mart, although the British supermarket giant's costly recent exit from the US has prompted a partial re-evaluation of his record.

Since leaving Tesco, Sir Terry, at one time named the most powerful unelected person in Britain, has focused on private investment activities and written a book about corporate leadership.

CD&R declined to comment.