Drilling firm plans AIM IPO amid defence demand surge

The Leicestershire-based business is looking to list on London’s junior market

Aerospace drilling firm Tek4 is preparing for an initial public offering in London, providing a welcome boost to the London Stock Exchange as it seeks to attract more defence companies to market.

The Leicestershire-based business, which counts Rolls-Royce and GE amongst its clients, is aiming to raise £20m through a listing on London’s junior market Aim at a valuation of approximately £40m, according to City AM.

Bankers at Panmure Liberum have been appointed to oversee the IPO, which is anticipated to take place later this year. Panmure Liberum declined to comment.

Tek4, which also maintains offices in Carolina, designs and manufactures specialised drilling machines for aircraft and gas turbine components.

Led by 40-year industry veteran Jason Duffin, the company has experienced a sharp increase in sales over the past year as conflict in Russia and the Middle East drives demand for its machinery.

A new factory currently under construction near its Leicestershire headquarters is also projected to boost its production capacity by approximately 80 per cent, sources said.

The listing will offer some respite to the London Stock Exchange following a shortage of new IPOs and a wave of takeovers over the past year. Across the main market and AIM, only seven companies listed in the first six months of the year, raising £577m.

Bankers are actively seeking defence-related businesses to bring to market as the government moves to strengthen the industry and investors capitalise on a surge in demand. The appointment of former defence secretary John Healey as chancellor last week is also widely anticipated to signal a significant boost in funding for the sector.

In his inaugural address as prime minister last Monday, Andy Burnham reaffirmed the UK’s commitment to raising defence spending from 2.6 per cent of GDP to Nato’s target of 3.5 per cent by 2035.

Should the pledge be delivered, it would represent a real-terms uplift of more than £25bn in under a decade.