Virgin Wines shares soar in first hour of trading on AIM

Direct-to-consumer wine retailer Virgin Wines began trading on the AIM market on Tuesday morning, under the ticker ‘VINO’.

It had placed 6.6 million shares at a listing price of 197p per share, with its stock rocketing 20% above that in the first hour of trading.

The company raised £34.9m for selling shareholders in its initial public offering, and £13m for itself.

“Today marks a truly exciting day in the history of Virgin Wines,” said chief executive officer Jay Wright.

“Our successful initial public offering and admission to AIM represents a significant new chapter in the group's long-term development.

“We have enjoyed strong, consistent growth leading to the group delivering more than one million cases of wine to our customers during 2020.”

Wright said the company had a “clear strategy” to continue that growth in the coming years, which is underpinned by its customer proposition as well as the benefit of a number of positive consumer trends.

“I am pleased to welcome our new shareholders to Virgin Wines and look forward with confidence to our next phase as a public company.”

Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said Virgin Wines was part of a “rush” of digital sales-focussed companies launching IPOs during the pandemic, as sales soared while consumers were stuck at home.

“Virgin Wines clearly reckons the time is right to capitalise on this online surge in orders after delivering more than a million cases last year,” she said.

“Positioning as an internet business rather than simply a wine merchant is a shrewd move by Virgin Wines, and mirrors Moonpig’s status as an e-commerce platform, which helped to generate huge interest in its IPO.”

Just how long the pandemic ordering habits of consumers would last remained uncertain, Streeter cautioned, with a preference to browse the aisles of wine shops once social distancing restrictions ease a possibility.

“However, industry analysis predicts that alcohol e-commerce sales worldwide are expected to exceed 40 billion in 20 key markets around the world by 2024, and Virgin Wines clearly wants to bottle those prospects for growth.”

Retail investors were not invited to participate in the IPO, which Streeter said locked them out of the immediate gains.

“Like many other IPOs which have launched onto the market in recent years, the shares were reserved for institutional investors, and ordinary investors had to wait for the shares to begin trading to get in on the action.

“In this speculative climate, it’s even more important that investors take a deep breath, do their research, and make sure they are really happy with the long-term prospects of the company before putting in their money.”

At 1145 GMT, shares in Virgin Wines were up 1.59% at 228.5p.