QinetiQ, the defence research firm being controversially floated by the British Government, could be worth as much as £1.325 billion when the shares debut later next month - a full £225 million more than was expected when the Ministry of Defence approved the sale.
As part of a privatisation process that will yield bumper rewards for private equity firm Carlyle as well as for senior management, QinetiQ today set out an indicative price range for the shares at between 165p and 205p.
The price range implies a mid-point valuation of £1.21 billion and a maximum of £1.325 billion - both comfortably ahead of initial expectations that QinetiQ would be worth about £1.1 billion.
The Government, whose 56 per cent stake in QinetiQ is valued at a maximum of £742 million, will collect a cool £371 million from selling half of it at next month’s float.
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The listing of QinetiQ has from the start been mired in controversy, with opposition politicians from both the Liberal Democrats and Conservatives claiming its assets were undervalued when the Labour Government sold the original stake to Carlyle for just £42.4 million in 2003.
Carlyle, which will sell half of its 30.5 per cent stake, stands to gain a maximum of £202 million at the listing.
The National Audit Office has threatened an inquiry into how the assets were valued ahead of the sale, which has also been attacked for excluding private investors.
QinetiQ said today that shares will be offered to all company staff, subject to eligibility criteria.
Sir John Chisholm, the chairman, and chief executive Graham Love already have stakes worth about £35 million between them.
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QinetiQ itself will bank about £150 million of the maximum of £629 million of new capital to be raised at the float.
The defence firm, which supplies services to both governments and commercial organisations, will use some of the proceeds to fund growth but will also plough about £45 million into its pension fund, which is in deficit.
Sir John said of the provisional pricing that: “Today marks a further milestone in QinetiQ’s progess to becoming a vibrant, growing and innovative public company. We are delighted by the level of investor interest that has been shown at this stage in IPO [initial public offering of shares] process which we believe illustrates the uniqueness of QinetiQ and the opportunities available in our marketplace.
Credit Suisse, JP Morgan Cazenove and Merrill Lynch have been hired to managed the flotation, which should see the shares start trading on February 15.