Hello Rainmakers,
AO World chief executive John Roberts has delivered a robust defence of the public markets, insisting he would “take being listed over private equity all day long” despite the scrutiny and volatility that come with a stock market quote.
In a wide‑ranging conversation, link to the main interview here, Roberts said the Manchester‑based online electricals retailer had long since made its peace with the demands of life as a plc.
“I’d rather be listed than private equity owned all day long,” he says. “There’s nothing wrong with being listed at all. It is not a problem for us, or me. It took a bit of getting used to, but it’s not even onerous… we don’t even do quarterly reporting anymore. We do six monthly.”
He contrasts that with what he sees as the rigidity – and the cliff‑edge dynamics – of private equity ownership, particularly for rank‑and‑file staff whose wealth is often locked up until an exit.
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Roberts is pretty dismissive of private equity for a myriad of reasons.
“If you’re in a private equity scenario, you are completely locked in with no liquidity. Well, that’s not good for all our people,” he argues, pointing to AO’s annual “gates” that allow employees and other shareholders to sell down.
“People have got mortgages to pay, they’ve got holidays to pay for, they’ve got kids to put through school and college… You don’t necessarily want a cliff where everything builds to that and then you’ve got to go again on the next private equity deal.”
Roberts is clear‑eyed about the market’s challenges – recalling how a modest profit miss in 2015 wiped hundreds of millions off AO’s value overnight – but says he has become more “ambivalent” about the share price and more focused on the underlying relationships.
“In 2015 we missed our profit by about a million quid… it wiped £400m off our market cap in the day,” he says. “The market always overreacts on all this stuff.”
The shareholder club: Ashley, Camelot, and the long tail
AO’s register is relatively tight, which he said helps. Roberts reels off the names almost as if he’s describing a syndicate.
“We’ve not got many shareholders,” he says. “We’ve got Mike Ashley, Camelot Capital Partners, James Hanbury at Lancaster, BlackRock, Vanguard, which makes up about 85% of the register… and then you’re into a very long tail.”
At the top of that list is Mike Ashley’s Frasers Group, which has quietly built its holding in AO to around 26%. Roberts insists the relationship is cordial, pragmatic – and refreshingly low‑maintenance.
“Mike Ashley is our biggest shareholder. I went three years without even speaking to Mike,” he says. “Now, if he ever wants to speak to me, he’ll send me a text message, and I’ll ring him back within whatever is a convenient time period.”
Contact, he reveals, when it comes, is direct and to the point.
“I spoke to him after our results for about five minutes,” Roberts recalls. “He rang me to congratulate me on the results, thanked me for the dividend that he got, and we had a bit of a laugh about it. He said, ‘I don’t know how you’re doing this. Who makes 4% in electricals? You’re knocking it out of the park. Keep doing it. I’m a very happy shareholder. Thanks very much, and have a nice summer.’”
Behind the scenes, Frasers’ strategic heft has already been deployed – even when proposed deals haven’t come off. AO explored using Frasers’ credit operation, but existing contracts made it impractical.
“We looked at that, but we couldn’t do Fraser’s credit,” Roberts says. “We were already in an agreement with NewDay… so we couldn’t do it because we were in contract. But we did use the Frasers position to renegotiate the contract with NewDay, and I rang Mike and said, ‘Thanks very much.’ As the key shareholder, you have actually helped us get a better deal.”
Listed, liquid (enough), and emotionally invested
If Ashley is the highest‑profile name on the register, Roberts insists AO’s broader investor base is just as important – and, in his view, unusually engaged.
“We’ve got great investors in our business who ask great questions, who are both economically and emotionally involved in the business, and we have a great relationship,” he says. “I’m super accessible… they’ve all got my number, they send me a WhatsApp, and I’ll give them a call back normally in about three hours.”
That accessibility and the steadying presence of long‑term holders are part of why, despite the scars of the IPO years and the swings in sentiment, Roberts is staying firmly on the public markets side of the listed‑vs‑PE debate.
For AO, he suggests, the combination of a tight, supportive register, real liquidity for employees and a CEO who still owns a “huge chunk” of his family’s wealth in the shares means that public markets, warts and all, are the better fit.
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I agree public markets have had a bad rap over recent years (understandably to a point) but also struggle to compete with the overall impact of the mountains of cash sat in PE. Valuations built up over boom years and multiple rounds mean that it’s tough call for investors to risk market pricing which for many will be less that hope and in worst case, lower than previous rounds. More needs to done about promoting the value of IPOs. Nit sure the PISCES effort will do much to help either.