(Alliance News) - ASOS PLC now has the "size and scale" to justify a Main Market move, the online retailer said on Thursday, waving goodbye to London's junior market, which it has called home for more than two decades.
With a market capitalisation of GBP2.50 billion, the fast fashion firm has long been one of AIM's biggest companies. At the moment, mixers maker Fevertree Drinks PLC, travel firm Jet2 PLC, life science researchers Abcam PLC and biopharmaceutical company Hutchmed (China) Ltd are the only AIM listings that can boast higher market values than ASOS.
"ASOS directors believe that given ASOS's size and scale, now is the appropriate time to move from AIM to a premium Main Market listing," the company said, explaining it thinks the move will raise its corporate profile and recognition, and increase investment in its shares by global institutions.
ASOS shares jumped 10% to 2,494.00 pence in London on Thursday afternoon. ASOS has come a long way. It floated back in 2001 with a market value of just over GBP12 million.
Though now a popular and recognisable name in itself, ASOS originally stood for As Seen On Screen. It was a reference to the company's initial selling proposition, offering imitations of garments worn by those in television and film.
"[Investors] have been buoyed by the news that ASOS is styling itself for a premium listing and plans to apply for entry to the main market of the London Stock Exchange, moving out of the AIM index," Hargreaves Lansdown analyst Susannah Streeter commented.
The stock had a bumpy 2021, however, shares are more than 50% lower than they were a year ago. ASOS shares were scarred by a profit warning.
ASOS back in October cautioned on profit due to cost pressures, the falling away of Covid-19-related tailwinds and supply chain issues.
Despite recent share price woe, ASOS would be a shoe-in for the FTSE 250.
AJ Bell analyst Russ Mould commented: "Once a posterchild for the AIM Market, ASOS is finally upping sticks and moving its stock listing to London's Main Market. It means the company should qualify for a place in the FTSE 250 index later this year and benefit from index funds buying its stock.
"AIM has historically been a place for young growth companies. Once they start to become a much bigger business, it is only natural to shift listings to the Main Market which is more the domain of longer-established companies or businesses that have successfully disrupted a market and are now generating decent profits. ASOS certainly fits in the latter category."
ASOS's market value dwarfs the likes of picture house operator Cineworld Group PLC, and gold miner Hochschild Mining PLC. They each have market caps of GBP542.7 million and GBP635.4 million, respectively.
The Main Market move for ASOS is a long time coming, AJ Bell's Mould added.
"ASOS should have made the move years ago given how it has progressed from being a UK business selling goods mimicking those worn by celebrities on the TV or in films, to now being an international online retailer," the analyst explained.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
ASOS (ASC)