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Virgin Wines shares soar 20% after stock market debut

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Saleha Riaz
·3-min read
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Virgin Wines joins a rush of digital sales focused companies launching IPOs during the pandemic. Photo: Getty Images
Virgin Wines joins a rush of digital sales focused companies launching IPOs during the pandemic. Photo: Getty Images

Virgin Wines (VINO.L), which describes itself as one of the UK's largest direct-to-consumer online wine retailers, saw its share price pop 20% in the first hour of trading as it debuted on the stock market Tuesday.

This means the firm has raised £13m ($18m) through the placing of 6.6 million new ordinary shares, with a listing price of 197p, resulting in a market capitalisation of £110m.

Selling shareholders will have made £34.9m, with the listing of 17.7 million existing shares.

Virgin Wines stock gained 20% Tuesday morning. Chart: Yahoo Finance
Virgin Wines' stock gained 20% Tuesday morning. Chart: Yahoo Finance

As of 10.45am the share price was up roughly 1% in London.

CEO Jay Wright said the IPO signifies "an exciting new chapter in the group’s long-term development. We have enjoyed strong, consistent growth recently resulting in the group delivering more than one million cases of wine to consumers during 2020."

WATCH: South African wine 'paradise' thrives despite lockdown

"Underpinned by the strength of our customer proposition as well as the benefit of many positive consumer trends, we have a clear strategy to continue this growth over the coming years," he added.

“Virgin Wines joins a rush of digital sales focused companies launching IPOs during the pandemic as sales soared while consumers were stuck at home,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (HL.L).

“Virgin Wines clearly reckons the time is right to capitalise on this online surge in orders after delivering more than a million cases last year. Positioning as an internet business rather than simply a wine merchant is a shrewd move by Virgin and mirrors Moonpig’s status as an e-commerce platform which help generate huge interest in its IPO,” she added.

Online greeting card retailer Moonpig (MOON.L) saw its shares surge 25% earlier this month as it made its £1.2bn stock market debut.

While noting that many consumers may prefer to browse the aisles of wine shops once pandemic restrictions ease, Street said industry analysis predicts that alcohol e-commerce sales worldwide are expected to exceed 40 billion in 20 key markets around the world by 2024, “and Virgin Wines clearly wants to bottle those prospects for growth.”

Street also said that retail investors were not invited to participate in the IPO, locking them out of the immediate gains.

READ MORE: Private investors demand access to IPOs after being excluded by Dr Martens, Moonpig

The CEOs of AJ Bell (AJB.L), Hargreaves Lansdown and Interactive Investor, recently demanded that private investors be given access to all IPOs.

2021 is turning out to be a big year for IPOs in the UK as companies look to make the most of stock market optimism amid a global effort to rollout COVID-19 vaccines. Dr Martens (DOCS.L) launched on the stock market recently with a £3.7bn valuation.

And food delivery company Deliveroo could be announcing its plans to float on the stock market early next month, hoping to raise more than £2bn.

Virgin Wines' IPO "is a clear indicator of the e-commerce market's ongoing growth, particularly in the food & drinks sector, with Deliveroo also gearing up to float next month," said Charles Bond, partner at Gowling WLG law firm.

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