The initial public offering of Debenhams, which has been earmarked for May 4, has been priced between 195p and 250p, valuing the company at £1.8bn at the mid-point of the range. However, Rob Templeman, the chief executive of the group, and his board face an uphill battle convincing previous investors – which include major institutions such as Standard Life and Morgan Stanley to buy back in at roughly the price that they sold out for.

Representatives from a number of institutions that were holders of Debenhams stock three years ago said they were sceptical about its growth prospects. “It is not a strong franchise and it is coming back at a reasonably full valuation,” says David Lis, a fund manager at Morley, which owned just under 2 per cent in Debenhams before it was taken private “They have clearly done a great job but the easy wins have been done. The newer, smaller shops have only been tested in a small way so far.”

An adviser close to Debenhams says future growth will be driven by three things: a more cost–effective store roll-out programme; its new store concept; and the prospect of extracting more from the existing operations by tightening up the supply chain, reducing the time between ordering goods and taking delivery of them from 16-18 weeks to between eight and 10 weeks. “The company has a better product mix today that is competitive in each category,” says the adviser. “Debenhams is also spending money more effectively, thereby increasing the return it can derive from the stores.”

Nevertheless, Templeman and his team have a tough task ahead of them over the next fortnight. The IPO will net the store’s top three executives a paper fortune of about £100m and, as analysts at Collins Stewart, the broker, point out, they are past masters at getting their timing right, buying low and selling high. They did exactly that at Homebase, buying the retailer from J Sainsbury with backing from Permira and transforming its profitability.