COVID-19 tester SourceBio to unveil £130m flotation

A diagnostics company which has been conducting thousands of daily COVID-19 tests will this week unveil plans to return to the London stock market through a £130m flotation.

Sky News has learnt that SourceBio International, which is based in Nottingham, intends to raise between £30m and £35m through a listing that is expected to be announced on Thursday.

Source Bioscience, the operating company, has increased its coronavirus testing capacity in recent months to 5000-per-day, and intends to utilise part of the flotation proceeds to double that number.

The business could ultimately be a beneficiary of Boris Johnson’s ‘Operation Moonshot’, a plan which if delivered would see 10 million Britons tested for COVID-19 every day.

Its initial contract with the Department of Health and Social Care has been renewed in anticipation of continued high demand for testing throughout 2021.

SourceBio was listed on the main London market until 2016, when it was taken private by shareholders including Harwood Capital and Continental Investment Partners in a £63m deal.

The group has since sold a number of non-core assets, and improved its financial and operating performance, according to City insiders who have seen a recent presentation.

More from Covid-19

Its listing on the junior AIM market is being handled by Liberum Capital, the investment bank.

SourceBio employs more than 200 people globally, including at its testing laboratories in Nottingham.

People close to the company said it intended to use the bulk of the funds it raises to repay debt, with between £5m and £10m invested in increased testing capacity.

One insider said that it generated average revenue of £42 for each coronavirus test it carries out.

In addition to its COVID-19 testing activities, SourceBio undertakes biopsy testing for the NHS as well as genomics and DNA testing.

The company also offers storage services for biotech companies.

Its customers include Bentley and Virgin Atlantic Airways, and it works with pharmaceuticals giants such as AstraZeneca and GlaxoSmithKline.

Information shared with prospective investors shows that SourceBio recorded earnings before interest, tax, depreciation and amortisation of just under £3m last year.

Jay LeCoque, SourceBio International’s chief executive, said: “The IPO on AIM allows us to significantly increase our COVID-19 testing capacity, accelerate earnings growth in our core business and execute on potential M&A [merger and acquisition] opportunities.

“It’s an exciting time for our business and we’re delighted with the keen interest from investors we have seen so far.”