England-based B&M seeks to capitalise on a wave of IPO activity this year.

Bloomberg/London

B&M European Value Retail SA, the UK retailer chaired by former Tesco boss Terry Leahy, is pressing ahead with an initial public offering that may value the discounter at as much as 2.9bn pounds ($4.9bn).

The shares will be offered in a range of 230 pence to 290 pence each, according to terms obtained by Bloomberg News, as the Liverpool, England-based company seeks to capitalize on a wave of IPO activity this year. Blue Inc, a UK budget fashion retailer, also unveiled plans for an IPO.

The retailers are proceeding with plans to sell shares as a rising volume of deals tests demand. Investors have already stumped up about 2bn pounds for shares of UK. retailers such as Pets at Home Group, AO World Plc and Poundland Group in IPOs this year, data compiled by Bloomberg shows. That compares with 106mn pounds in all of 2013. Last week was Europe’s busiest for IPOs in 2014, according to data compiled by Bloomberg, although UK insurance provider Saga priced its sale at the bottom of an offered range and retailer Fat Face Group cancelled its offering.

Shares of companies that have gone public in Europe this year have underperformed the wider market. The Bloomberg European IPO Index, which tracks companies that have sold shares, has risen by about 1% in 2014, compared with a gain of about 5% in the STOXX Europe 600 Price Index.

B&M, whose UK stores sell products from televisions to bed linen, has said it plans to raise about 75mn pounds in the IPO to reduce debt. Clayton Dubilier & Rice will also sell a proportion of its holding in the retailer. The buyout firm acquired a “significant” stake in December 2012.

The IPO marks a return to the stock market for Leahy, who stepped down as Tesco’s chief executive officer in 2011. B&M has delivered “impressive growth” as a private company and has “much more to come,” he said in a statement this month.

Sales in the year ended March 29 rose 28% to 1.27bn pounds, including growth of 6.5% at stores open at least a year. B&M added 42 outlets in the period.

Between 25% and 40% of B&M’s shares will be freely traded after the IPO, excluding an over-allotment option, the terms show.

The final price is expected to be set on June 11, with share dealings set to commence on June 12.

Blue Inc, in which former Marks & Spencer Group Plc CEO Stuart Rose owns a 5.1% stake, plans to raise as much as 15mn pounds in its IPO and the shares will trade on London’s AIM. The funds will be used to support the growth of the male-focused retailer, which had about 240 UK stores at the end of last year and five overseas franchise outlets.

Sales at Blue Inc were 98.7mn pounds in 2013, having grown at an annual pace of 32% over the past five years.