Shares in DWF will start trading publicly on Friday at a price that values the international law firm at £366m, the lower end of expectations, it was announced this morning.
The first law firm to list on the main market of the London Stock Exchange, the issue of new and existing shares at 122p will raise just over £95m – more than had previously been predicted – representing 26% of the company’s issued share capital.
Around £19m of that will repay a portion of partners’ capital contributions, up to £10m will be used to invest in additional IT systems, and the remainder will be used to fund “general corporate purposes”, including working capital and any future potential acquisitions.
Equity partners’ remaining shares will be subject to a lock-up expiring on the announcement of DWF’s results for the financial year ending 30 April 2024, although they will be able sell some of their shares before then.
Some 20% of each partner’s holding will be released from the lock-up following announcement of the group’s preliminary financial results for 2019/20. On the same landmark each following year, they will be able to sell 10% of their shares, as well as a further 10% “subject to individual performance”.
Locked-up equity will also be released in the event a partner is a ‘good leaver’, but it will be clawed back if they are a ‘bad leaver’ during the lock-up period, and in relation to the performance tranches, if they do not meet their targets.
All of the 320 or so DWF partners will move onto a fixed profit share after the listing, with equity partners receiving 40% of their previous year’s income, and fixed-share partners 90%.
Dividends will make up some of the shortfall for equity partners, but chief executive Andrew Leaitherland told Legal Futures recently that they would not make as much, although this did not take account of the “capital opportunity”.
“It will be a haircut for people but we’re not doing this with a view to making more money,” he said.
Some 10% of shares will go into an employee benefit trust that can award shares based on performance and promotion, and also to help recruitment, while 2.5% of the equity will be allocated to employees – subject to a certain length of service – on admission, and there will also be ongoing opportunities, such as buy as you earn schemes.
Mr Leaitherland said: “DWF and its partner group see this as the start of the next phase of DWF’s evolution and we are very pleased by the support shown by our new investors.
“We see substantial, long-term opportunity, to build on our strong track record and further develop and grow our complex, managed and connected services capabilities, while attracting and retaining the best talent, investing in technology and carrying out targeted M&A.
“This, coupled with our differentiating features including international reach and scale, our innovative business model and the range of services we provide to our clients, positions us to take advantage of the expanding global legal services market.”
Conditional trading in the shares starts today, before it goes unconditional on Friday.