Pensions firm Xafinity goes public in attempt to shake up the industry

Pensions consultancy Xafinity has announced its intention to float on the London Stock Exchange as it bids to “disrupt the pensions world”.

The company hopes to raise around £180m by placing more than 129m ordinary shares at an offer price of 139p - a move that would give it a market cap of £190m.

A string of companies abandoned their plans to go public amid market volatility following the vote to leave the European Union last year. But Xafinity’s float indicates that firms are beginning to return to the market: it is the sixth company to go public in London in 2017, compared to three that had floated this time last year and four that had done so at this stage in 2015. Its initial public offering would be the biggest of the year so far. 

The decision follows three years of profitable growth at around 6pc each year for the company, which provides advisory and compliance services to more than 550 pension scheme clients.

Paul Cuff, the company’s co-CEO, said Xafinity's float offered the chance of consolidation with a similar-sized company. This would allow it to challenge the bigger players in the industry, notably Mercer, Aon Hewitt and Willis Towers Watson.

“They are the products of consolidation in the past,” said Mr Cuff. “We think there are opportunities for potential consolidation in the mid-tier, and we think we can provide a differentiated service versus the big three.

“A consolidated firm would have a very good chance to do very well in the market. There is nothing on our radar immediately but it is something the IPO potentially facilitates for us in the future.

“We think the pensions world needs some disrupting. Service levels can be improved and there’s a great opportunity for a mid-tier firm to take market share organically and via acquisitions.”

Zeus Capital is acting as financial adviser and sole bookrunner to Xafinity on the deal, the proceeds of which will be used to pay existing shareholders and reduce debt.

Mr Cuff added that the company expects to have a dividend yield of 4.6pc on listing.