Esure expects to be valued at over £1bn after flotation

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Esure expects to be valued at around £1.1bn when it makes its London stock market debut this month.

The insurer, which insures about five per cent of Britain’s motorists, set a price range of 240p to 310p per share for the offering, in which it plans to float up to half of its shares.

Analysts estimate that founder and chairman Peter Wood will make £175m from the float.

After years of subdued listing activity due to the financial crisis, London has seen a resurgence in companies seeking to sell shares on its markets this year.

Estate agent Countrywide and cable products maker Hellermann
Tyton are also in the process of listing.

Announcing its flotation plans last week, Esure, which owns the female-focused Sheilas’ Wheels brand, reported 2012 pre-tax profit more than doubled to £115m.

“Our 2012 results were excellent and investors will clearly look at that and make their own decisions,” chief executive Stuart Vann said on Friday, as investor roadshows kicked off in London.

“We will be seeing (investors in) a lot of different markets over the next two weeks so it is a very exciting time for us, very busy but very exciting.”

The company plans to raise £50m from the sale of new shares to wipe out its debt.

It said the bulk of the offering would be made up of existing shares being sold by Mr Wood, Tosca Penta Investments as well as company management and employees.

How much they sell will depend on where the offer prices, but the total stake floated will be between 35 and 50 per cent of the company, prior to an overallotment option which could see the offer size increased by 15 per cent if demand is strong.

At the mid-point of the price range the company said it expected to be valued at £1.1bn, with the selling shareholders receiving around £438m.

Mr Wood will remain esure’s largest shareholder following the listing, which is expected to be completed on March 22.

The entrepreneur, who in 1985 pioneered telephone-based insurance sales in Britain with the launch of Direct Line, founded esure 13 years ago as a joint venture with Yorkshire mortgage lender Halifax, which was acquired by Lloyds in 2008.

In 2010, Mr Wood led a consortium that paid £200m for a 70 per cent stake in esure held by Lloyds.

Direct Line, majority owned by Royal Bank of Scotland, floated in October last year, and has seen its shares rise around 20 per cent since.

Direct Line has about 3,750 staff at its three sites in Leeds and one in Doncaster, part of about 15,100 across the group.

Deutsche Bank and JP Morgan are acting as joint global co-ordinator and joint bookrunners on esure’s sale, while Canaccord Genuity and Numis Securities are acting as co-lead managers.