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When is the Asda IPO?
The Asda IPO is not likely to happen before 2022, but no exact date has been set. Head of Walmart’s international division, Judith McKenna, confirmed that the business is not rushing into anything and the listing will take a few years to happen. Asda is seeking to list on the London Stock Exchange (LSE).
How to trade or invest in the Asda IPO
If you want to trade or invest in the Asda IPO, you can choose to do so before or after the listing.
Before the IPO
IG could offer a ‘grey market’ before Asda’s IPO. If we do this, you can speculate on Asda’s share price before the listing happens. With our grey markets, you can:
- Buy (go long) if you think the market cap will be above the predicted price at the end of the first trading day
- Sell (go short) if you think the market cap will be below the predicted price at the end of the first trading day
Trade or invest in similar stocks today
If you want to get exposure to other companies in the retail sector right now, you can choose between stocks such as Sainsbury’s, Tesco, Morrisons and Ocado.
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What will Asda’s IPO value be?
Asda’s IPO value is still to be decided by an investment bank. This will happen when it files for the listing. However, it has been reported that Asda could be valued at between £7 billion and £8 billion. This figure is based on assumed annual earnings of £1.2 billion.
What could the Asda share price be when it floats?
Asda’s share price when it floats will depend on how many shares it will release and what the final IPO valuation is. The exact figure will only be released when the valuation has been decided by an investment bank. After the IPO, the share price will depend on supply and demand. It is not known how many shares Asda will release to the public.
Why is Asda going public?
Judith McKenna (Head of Walmart’s international division) said that Asda is seeking to go public to ‘strengthen the long-term success of the business’. As Walmart is an American corporation, she said that the focus of the listing would be to create a stronger local (UK) business. The IPO would give Asda the opportunity to pursue its own strategy while retaining access to Walmart’s buying power. The listing would also mean a big cash injection for Walmart.
In April 2019, the Competition and Markets Authority (CMA) shut down a merger between Asda and Sainsbury’s, stating that the agreement would result in higher prices and fewer product options for consumers. The IPO announcement was made after a proposed merger failed.
What is the outlook for Asda?
The outlook for Asda is mixed following the collapsed Sainsbury’s deal and given the upcoming challenges surrounding Brexit. Going forward, there will be a strong focus on its strategic priorities, particularly customer value and experience – the latter being a way for the firm to differentiate itself from other discount supermarkets such as Aldi and Lidl. The firm has plans to roll out ‘scan and go’ machines, expand its click-and-collect offering, and even to trial same-day deliveries to improve the customer experience.
How has Asda been performing?
Asda has reported impressive sales growth for eight consecutive quarters (as at September 2019). Its last financial year showed operating profit was up to £803.2 million and net cashflow was up to £1.29 billion.
These results came despite the macroeconomic uncertainty stemming from Brexit. However, CEO Roger Burnley stated that planning for the UK’s departure might prove more difficult than the expected March exit, as logistics networks will have an overflow of Christmas stock.
Asda was the first UK retailer to launch a ‘Black Friday’ sale in 2013, and its market share increased slightly from 2013 (17.1%) to 2014 (17.2%). This was until discount retailers Aldi and Lidl started gaining popularity – and the Asda market share started to dwindle (15.4% in 2019).
Who are Asda’s competitors?
Asda’s competitors include Tesco (market cap of £23 billion), Sainsbury (market cap of £4.7 billion), Morrison (market cap of £4.8 billion), Waitrose (not listed), Co-op (not listed) Lidl (not listed) and Aldi (not listed). Asda is the third largest of the four major UK retail chains in terms of market share.
Asda’s key personnel: who manages the company?
There are six key personnel members on Asda’s management team. Members of the executive board are:
|Roger Burnley||President and chief executive officer|
|Andy Murray||Chief customer officer|
|Rob McWilliam||Chief financial officer|
|Hayley Tatum||Senior vice president: people|
|Anthony Hemmerdinger||Senior vice president: operations|
|Derek Lawlor||Senior vice president: commercial|
What is Asda’s business model?
Asda’s business model is centred around the sale of food, apparel and general merchandise. It also provides both online shopping and delivery services. Asda manages:
- Supercentres – the largest of its stores, offering an extended range of items, often supported by restaurants, banks, hairdressers and dry cleaners
- Superstores – the most common format, offering a large range of items, often supported by a café, healthcare, and other non-food services
- Supermarkets – the smallest of its stores, focusing on food and convenience
- Asda Living – offering a range of home and fashion merchandise
- Petrol filling stations – offering petrol services and a kiosk with food and travel items
Register your interest for IPO news
How do IPOs work?
IPOs – or initial public offerings – happen when a private company decides to go public. This means that they list on an exchange and start selling shares to the public. Once the company decides how many of its shares it wants to sell, an investment bank will do a valuation of the business to decide how much the shares are worth. This short video has more details on how IPOs work.
1Based on revenue excluding FX (published financial statements, June 2020).