The UK’s biggest retailer of pet products is planning to cash in on our love of animals with a £700m stock market flotation.

Pets at Home’s sales have risen by 7.5% this year despite the recession.

Bridgepoint, the private-equity owner of the chain, has held talks with Goldman Sachs, JP Morgan Cazenove, NM Rothschild and Bank of America Merrill Lynch in the past two weeks about the timing, valuation and investor appetite for a float.

If Bridgepoint proceeds with a listing, it could yield hundreds of millions of pounds in profit for its investors. The private equity group bought the chain for £230m in 2004 but it has been refinanced four times since, generating more than £120m in cash for its investors already. Pets at Home has enjoyed bumper results, with pre-tax profits rising by 29% to nearly £40m.

The pet market has increased by 30% over the past six years and is tipped to reach more than £4.2 billion by next year — even though pet ownership is in decline.

Bridgepoint cautioned that no banks had been appointed and no decision taken on whether to float or sell the business, or on the timing of the exit.

The news comes amid a renewed bout of fund-raising fever triggered by hopes of economic recovery. Paul Pedley, the former boss of Redrow, the housebuilder, will tomorrow announce plans to raise £50m to buy new-build flats in London from distressed developers.

Pedley will be advising a new company, London Residential Opportunities (LRO), which is being lined up by bankers at Matrix Corporate Capital to float on the main London exchange. Steven Norris, the former Conservative transport minister, will sit on the board of Callidus Advisory Partners, the management company for the new venture.

The team hopes to snap up new apartments at bargain prices and then rent them out until the market improves, selling them later at a profit. The company will have a seven-year lifespan and aims for returns of more than 15% a year.

Investing in new-build London flats now will be seen as an extraordinary bet but Pedley said it would take advantage of “compelling” buying opportunities. Savills forecasts London house price growth between 2011 and 2014 of 34%.

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