Chernobyl FX star DNEG prepares blockbuster London float | Business News
A multi-Oscar-winning British visual effects house which has worked on films including First Man and Venom is preparing a blockbuster of its own: a London float that will value it at hundreds of millions of pounds.
Sky News has learnt that DNEG – which is owned by Prime Focus World, an Indian-listed company – has appointed bankers to work on the listing, which could take place as soon as September.
JP Morgan and Morgan Stanley are understood to have been hired to work on the deal, which is likely to be one of the City’s most prominent initial public offerings of 2019.
If it proceeds, a share sale would be expected to raise tens of millions of pounds for DNEG, with a valuation potentially stretching to more than £300m, according to one source.
The timing and other details of DNEG’s IPO have yet to be finalised, insiders said on Friday.
The exact date of a flotation is likely to be influenced by any market volatility resulting from the uncertainty surrounding Britain’s departure from the European Union, with the Conservative Party leadership front-runner Boris Johnson pledging a “do or die” Brexit on October 31.
DNEG’s strong pipeline of new film and television projects, and the international nature of its work, are thought likely to shield it from the worst effects of any broader market downturn.
The company, which was founded as Double Negative in London in 1998, is recognised as being among the world’s leading producers of visual effects.
It is run by Namit Malhotra, the founder of Prime Focus and engineer of the 2014 deal which combined the two creative studios.
Among DNEG’s recent credits is Chernobyl, the Sky and HBO drama about the disaster at the Russian nuclear power plant in 1986.
DNEG has won five Academy Awards and five Baftas, including this year’s Best VFX Oscar for First Man, the biopic about Neil Armstrong, the first man to walk on the moon.
The company won in the same category at last year’s Academy Awards for Bladerunner: 2049 and has also enjoyed success at the industry’s most prestigious ceremony for its work on films including Ex Machina and Interstellar.
Accounts filed at Companies House for the year to March 2018 show that the company recorded a gross margin of over 50% during the period, illustrating the highly profitable nature of its activities.
The company reported revenue of £108.2m and a pre-tax profit of £12.8m for the year.
DNEG employed well over 1000 people at the date of those accounts, a figure which is thought to have risen since then.
Its planned flotation follows the sale of a number of leading visual effects companies and post-production houses, including Foundry, which was sold to New York-listed Roper Technologies in March for more than £400m.
Political uncertainty has been one of the factors weighing on the City’s IPO market this year, with few high-profile market debuts.
One exception has been Trainline, the rail ticket booking app, which has seen its shares rise more than 15% since its debut last month.
Another successful listing has been that of the payments company Network International.
However, recent issuers such as Aston Martin Lagonda and Funding Circle, the peer-to-peer lender, have contributed to a souring of sentiment among institutional investors.
A spokesman for DNEG declined to comment.