Newly-floated staff training company Mind Gym (MIND:AIM) offers investors a chance to capitalise on growing pressure for companies to improve the way they do business and engage, motivate and treat staff.

Mind Gym uses behavioural science to build training programmes which it delivers to a wide variety of companies including 62% of FTSE 100 and 59% of S&P 100 index constituents.

The business has grown revenue annually by more than 20% over the last few years and pre-tax profit has increased by an even greater amount.

It intends to pay a small dividend but chief executive Octavius Black says fund managers who have taken part in the IPO (initial public offering) offer have principally been attracted for potential capital gains rather than income.

Black says the training market is very competitive but doesn’t see that as a problem. ‘I’m told there are more training and HR companies in the UK than there are hairdressers. What we do is very different to other companies in our space,’ he remarks.

PROS

Mind Gym’s products and services tap into a number of high profile social issues which companies are under pressure to address. These include identifying and coping with mental health issues at work, the gender pay gap and bullying and harassment in the workplace.

The IPO could help to raise its profile and potentially led to greater sales enquiries. The business has a net cash position and product research and development is funded out of profits.

Black tells Shares that the business didn’t suffer during the last economic downturn as it was in strong demand to help companies address morale and performance issues in difficult times.

It is geographically diverse with operations in 29 countries, although the majority of income comes from the UK and US.

CONS

We get the impression it has a soft approach to sales and marketing. Black says the business likes to produce discussion papers on specific topics which it then hopes will stir interest among companies so that they come knocking on Mind Gym’s door for help.

The CEO says there is a shortage of senior-level occupational psychologists, thus raising concerns about whether Mind Gym can find the right type of people to help support growth.

The business isn’t raising any new money at IPO; instead existing shareholders including many of the senior directors are using the listing to sell a combined £50.8m of stock.

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