MusicMagpie, the online reseller that specialises in secondhand tech such as smartphones and games consoles, is heading for the stock market in a flotation that will value the business at £208m.
The initial public offering of MusicMagpie, which was founded in Stockport in 2007 and also has operations in the US under the Decluttr brand, is expected to see shareholders enjoy a £95m windfall from selling down their stakes in the business.
The firm’s chief executive, Steve Oliver, who co-founded the business with Walter Gleeson, will make £12.3m from selling some of his 16.6% stake. Following the flotation he will control or have options over 12% of MusicMagpie’s shares, worth almost £25m.
“We, the executives, are rolling the majority of our stakes,” he said. “It is our private equity partners primarily that are participating in the liquidity exercise. I’m here for the future. I’ve never been more excited for MusicMagpie.”
After the listing on London’s Aim market, which will also raise £15m to pay down debt and expand its new smartphone rental and supermarket kiosk businesses, other directors and senior management will own less than 5% of MusicMagpie.
The company has benefitted from the pandemic shift to home-based working and lockdown living, reporting £153m in revenues and £13.9m in profits in the year to the end of November. Top sellers have included the iPhone 7 and 8 as well as games consoles and MacBooks.
The firm, which last year began setting up kiosks in Asda and Co-op stores to recycle old phones for cash, makes 54% of revenues from the resale of consumer technology, 38% from disc media such as CDs, and 7% from books.
“If 13 years ago in those garages we set up I’d known we were going to be the UK’s biggest mobile phone recycler I wouldn’t have gone with MusicMagpie,” said Oliver. “But customers don’t care about the [incongruous] brand name, if we were to change it there would be a significant risk to the business. Carphone Warehouse don’t sell car phones out of a warehouse anymore. People understand brands evolve.”
The company, which also lists the products it sells across eBay and Amazon Marketplace, says the market for pre-owned consumer technology and physical media is worth £9bn in the UK and US.
“In the UK alone, we estimate that people are sitting on around £16.5bn worth of technology that they no longer use,” Oliver said. “Only a small percentage of consumer technology items are currently recycled.
“The listing on Aim reflects not only the success that we have enjoyed to date but also our confidence in our ability to capitalise on the favourable long-term trends that continue to drive the company’s strong performance.”