International firm DWF expects to raise £75m when it floats next month and becomes the first legal practice eligible for admission in the FTSE.
In a statement today, the firm revealed it will put at least a quarter of the business up for sale as issued share capital for trading on the main market of the London Stock Exchange.
The cash raised is expected to repay a portion of the members’ capital contribution, invest in operations and infrastructure, and fund what are described as ‘strategic initiative changes programmes’. There is also scope for potential funding for future acquisitions.
Members of DWF who are selling shareholders are expected to hold a majority of the shares after admission. Ordinary shares held by them will be subject to lock up arrangements until April 2024. Release from lock up will be made in tranches each year from 2020, with locked up equity also released subject to individual performance and in the event an individual becomes a ‘good leaver’. Equity will be clawed back from those who leave the company during the lock in period or do not meet performance requirements.
The group will pay partners on a fixed basis, with the remainder of partners’ remuneration primarily coming from dividend income derived from holding shares and potentially from the annual bonus pool and share incentive plans.
The DWF board says its dividend policy will retain sufficient capital to fund ongoing requirements and to invest in the group’s long-term growth, but it will also target a dividend payout ratio of 70% of the group’s profit after tax.
Admission to the stock exchange next month will confirm DWF as the biggest UK firm to have taken this option. It is expected several other firms of a similar size will be watching the firm’s performance in anticipation of floating themselves.
The Manchester-based firm, which first publicly suggested the idea of floating in June last year, has announced a series of international ventures over the past 18 months including an ‘exclusive association’ with Los Angeles-headquartered firm Wood, Smith, Henning & Berman (WSHB). In the year ending 30 April 2018, DWF opened offices in Singapore, Italy and Qatar, as well as adding new offices in Australia and forming a ‘strategic alliance’ in Turkey.
Listing on the stock exchange may be an issue where the firm is located in jurisdictions where external ownership is prohibited, but it is understood DWF has made arrangements to ensure regulatory compliance in these countries.