HENRY ENGELHARDT, the 46-year-old chief executive of Admiral Group, should find himself with a larger than expected paper profit of £128 million when the specialist car insurer floats next month.
It emerged yesterday that Mr Engelhardt’s 14 per cent stake in Admiral will rise to about 19 per cent just before the initial public offering (IPO), under a staff and management incentive scheme.
Sources close to the IPO said last night that Admiral planned to offer roughly a one-third stake in the business for £225 million, valuing the insurer at £675 million. The figure exceeds the £600 million valuation of the business when Admiral revealed its plan to float in April.
Although Mr Engelhardt said the size and structure of the offering had not been finalised, the American confirmed that Admiral hoped to float in the last two weeks of September. Mr Engelhardt, who founded Admiral in 1993 and orchestrated a £110 million management buyout of the business seven years later, will not be the only beneficiary of the IPO. More than half of Admiral’s 1,500 staff, most of whom are call-centre workers, will each reap up to £50,000.
The 900 employees, based mainly in Cardiff and Swansea, own about 39 per cent of the company, along with the management team. Barclays Private Equity, which backed Mr Engelhardt’s buyout, has a 42.3 per cent stake, while Munich Re, the German insurer, owns 18.6 per cent.
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Admiral’s brands include Diamond, which specialises in insurance for female drivers, and elephant.co.uk, the online insurance business.
Mr Engelhardt, who lives in Wales with his wife and four children, told The Times that the stake held by staff and management would rise to about 50 per cent before the IPO, under the incentive scheme. He said: “There was a structure put in place to incentivise staff and management. In the event of an IPO, their holding rises, resulting in a slight dilution for Barclays and Munich Re.”
The comments came as Admiral beat its internal forecasts with a 30 per cent rise in interim core profits to £45.3 million. Sales increased by 30 per cent to £269.3 million, while the number of customers rose to 942,000, from 808,000 in December.
Admiral, which insures those tending to pay higher premiums, wrote total premiums of £233.3 million in the first half, up by 30.3 per cent on a year ago.
Bankers hope that a successful listing of Admiral will revive confidence in the UK’s flagging IPO market.
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Several businesses, including Cyclacel, the Scottish biotechnology firm, and Dyno Group, the drain cleaner, have shelved their planned flotations in recent months.
Admiral has hired Merrill Lynch as global co-ordinator, bookrunner and sponsor of the proposed IPO, and Citigroup as joint lead manager.
Lazard and Fox-Pitt, Kelton will also have a role as co-managers.