Smartphones-to-computers recycler and reseller MusicMagpie (MMAG:AIM) is set to swoop onto AIM (22 April) today through a flotation valuing the ‘re-commerce’ business at £208 million.

That market valuation equates to roughly 1.4 times historic sales and 15 times historic earnings.

Trading as musicMagpie in the UK and Decluttr in the US, MusicMagpie is a specialist online reseller of used electronic products, games, CDs and DVDs.

A ‘comfortably’ oversubscribed placing at 193p raised £15 million of new money for the company, though selling shareholders took £95 million off  the table.

Chief executive Steve Oliver tells Shares that investments in proprietary technology and the trust it has built with consumers give MusicMagpie an edge in the market, with competition coming from peoples’ propensity to leave old tech in drawers.

MusicMagpie estimates that in the UK alone, ‘people are sitting on around £16.5 billion worth of technology that they no longer use, and that only a small percentage of consumer technology items are currently recycled’.

The company takes these unwanted products and uses proprietary technology to optimise the sales price for every item, simultaneously listing them across multiple sales sites, including the musicMagpie and Decluttr websites and applications, as well as Amazon and eBay.

The group has the highest number of seller reviews on both Amazon and eBay, where it consistently achieves positive feedback scores.

MusicMagpie resold over 400,000 consumer technology products to consumers in the year to November 2020 and Oliver estimates the company resells around 2,500 tonnes of books and disc media each year that could have ended up as waste.

MusicMagpie’s sales increased from roughly £115.5 million in the year to November 2018 to about £153.4 million in the year to November 2020, a compound annual growth rate of about 15.2%.

Over the same period, earnings before interest, tax, depreciation and amortisation sparked up from £2.6 million to approximately £13.9 million for a CAGR of approximately 132%, demonstrating the operational leverage in the business.

The new money raised at the stock market listing will repay debt and fund the expansion of MusicMagpie’s smartphone rental proposition as well as the roll-out of its SMARTDrop kiosk concept, which is a way for sellers to recycle phones for cash, with kiosks now being rolled out in Asda and Co-op branches.

MusicMagpie also expects to qualify for the London Stock Exchange’s Green Economy Mark when it arrives on the stock market. This recognises companies that derive 50% or more of their total annual revenue from products and services that contribute to the global ‘Green Economy’ and could make the shares more attractive to ESG-minded investors in the future.

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