Is this IPO worth a punt?

Why does an entrepreneur do it? I mean, what motivates a person to work every hour under the sun, take a big personal risk, and take on the responsibility for their employees, all for an uncertain payout at the end of it all?

The lucky few get very rich. They float their businesses on the stock market or get bought out, and then get to see out their days on the golf course.

But the thing is, I very much doubt that money is the main motivation for most entrepreneurs. I don’t think they want a life of leisure. I’ve seen so many great entrepreneurs dive right back into work after they’ve ‘cashed out’.

I’ve written about a few of them in recently. Think of Stephen Wickes of Inland Homes, who ran housebuilder Country and Metropolitan before it was acquired in 2005.

Then there’s Gary Ashworth, who founded employment agency Interquest shortly after selling out of his first recruitment company.

You might think that if you’d put in all the hard work to build up a company and sold it on for a massive profit, you’d just sit back and enjoy the good life.

But the kind of person who makes it big in business rarely rests too long on their laurels. The golf course and the exotic holidays can only hold their attention for so long before they crave a return to the boardroom and deal-making.

I spoke recently to another CEO who’s going through it all again. In the 1980s, he built and then sold a corporate entertainment business. In the 1990s, he founded a telecoms company with less than half a million pounds of seed capital – and pocketed £40m when it was sold a few years later.

Now, he’s back for another bite at the apple. Today, I’m going to introduce you to him and his company. It’s being floated on Aim at the end of the month, and I think we should pay it some attention. Let me explain why.

Tim Radford’s £55m idea

The man in question is Tim Radford, who built up a telecoms company called Project Telecom during the mobile phone boom of the 1990s. The company managed mobile telephony for business customers and floated on the market at the peak of the technology, media and telecoms (TMT) bubble.

Vodafone bought it for £162m in 2003. At the time, he said that he had no intention of retiring, and that he would look for a new venture. Timico was founded a year later.

Radford had made his money in mobile phones, but it seemed to him that the internet was the next big opportunity. Bandwidth was increasing fast and ‘voice over internet protocol’ or Voip (think Skype) was becoming the mass market product it is today.


Sign up for a 4-week FREE trial of MoneyWeek magazine

MoneyWeek magazine signup

"The only financial publication I could not be without."
John Lang, Director, Tower Hill Associates Ltd.


He saw an opportunity to sell Skype-like data and telephony systems to small- and medium-sized businesses. So, Timico became a one-stop shop, offering managed networks, communications systems and hosting. Its ideal customer is a business operating on several sites – one that needs a network to deliver its data, voice and mobile requirements.

Timico provides everything in ‘the cloud’. It works well, because the customer no longer needs to make its own in-house investment and cost becomes a flexible part of its operating expenses.

The services in effect are rented, and that ‘rent money’ makes up 80% of Timico’s revenues. Revenues have been growing nicely, too – up by 10% last year to £42m.

How does it grow? By acquiring new customers, and by cross-selling to its existing base. Eighty percent of customers currently take only one product, so persuading them to take a package of services will be a focus.

Timico also has another, more aggressive, growth strategy. The strategy is very simple – buy customer contracts, then save on overheads by bringing them onto its own network and hardware. It has already bought up seven contracts in that way.

When Timico floats, should you invest?

In ten days, Timico will float on Aim – the 30 May 2014.

I’ve already told you about how it can grow. Another thing which will attract investors is a juicy yield. The business throws off a lot of cash and the board plans to pay a dividend that equates to a 4.5% yield at whatever the IPO (initial public offering) price turns out to be.

It also plans to raise £15m of new money and expects to have a market cap of around £55m. If Radford can maintain a solid future growth rate on top of this, then it could be a stock worth looking at.

I like the business. What sets it apart from larger competitors is that it can respond to customers quickly. This is a very attractive proposition to the SME (small to medium enterprise) customers it targets, who often find that the major telecom players are too big to offer anything other than a standardised range of products.

And of course, even a small business customer is going to be important to an independent. Can the same be said for the BTs of this world?

Let’s see what happens when it floats in a few days.

This article is taken from our FREE penny share investment email Penny Sleuth.
Penny Sleuth is our FREE twice-weekly penny share investment email. Top penny share expert David Thornton will help you master the world of small cap investment. Each and every week he will pass on his simple, plain-talking insights and expertise that really could change your fortunes. Please enter a valid email address

To sign up enter your email address.



Information in The Penny Sleuth is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. The Penny Sleuth is an unregulated product published by Fleet Street Publications Ltd. Fleet Street Publications Ltd is authorised and regulated by the Financial Conduct Authority. FCA No 115234. http://www.fsa.gov.uk/register/home.do

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

  • Cornishphil

    It seems impossible to find out how to participate in this ipo.Panmure Gordon are the brokers, but there is nothing on their website. The company’s ipo information also is lacking in this respect. Will I have to wait until it starts trading on May 30th?


Hedge fund manager Hugh Hendry: 'It felt like the sun rose only to humiliate me'

In a series of three short videos, Merryn Somerset-Webb talks to Hugh Hendry, manager of the Eclectica hedge fund, about everything from China to the US, Europe, and Japan.