SHARES in QinetiQ, the defence research group, jumped 6.5 per cent to 213p as the company made its debut as a quoted stock yesterday. The price valued the business at £1.4 billion.
Private investors won a stake worth £84 million in Labour’s first privatisation, amid controversy over the sale price. Sir John Chisholm, chairman of QinetiQ, saw a 2 per cent stake he acquired in 2002 for £129,000 become a holding worth £28 million. Graham Love, chief executive, became worth £23 million through his 1.6 per cent holding.
Carlyle, the US venture capital group, reduced its holding from 30.5 per cent to 13 per cent and took out £161 million. The Government, which is cutting its stake from 56 per cent to 23.9 per cent, gained about £290 million from the sale. The shares had jumped from 200p to 220p in initial trading. Lord Drayson, the Defence Minister, defended the Government’s handling of the flotation and the partial sale to Carlyle more than three years ago. Many commentators have said that the stake was priced too cheaply and the sale is being investigated by the National Audit Office.
Lord Drayson said that Carlyle, whose advisers include the former US President George Bush and the former Prime Minister Sir John Major, and the directors had exposed themselves to risk because QinetiQ had been “a wasting asset” before their injection of cash.
QinetiQ, which is formed from the bulk of the Government’s laboratories, has relied on the Ministry of Defence for most of its work, although it has recently been attempting to win more commercial business.
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The offering was more than six times oversubscribed. .