Gocompare demerger goes ahead valuing shares in the new company at £310m

Oliver Gill
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Gio Compario has the "marmite factor" according to analysts

The market was thanking its lucky stars this morning after Gocompare.com (Goco) completed its spin-off from insurer Esure.

Despite a nervy IPO market that has seen a raft of withdrawals in recent weeks, the Goco demerger, first announced in September, went ahead as expected. Trading at 74.25p each, the float values the total shares issued in the price comparison site at £310m.

"The process of demerging Gocompare.com from Esure Group has now been completed. Both businesses will benefit from being able to focus on their distinct strategies, with Gocompare.com as a leading UK price and product comparison website and Esure Group as a leading UK provider of motor and home insurance," said Goco's chairman Sir Peter Wood.

Read more: GoCompare float is go after shareholders approve Esure demerger

Esure shares – which at that time included the value of Goco – closed trading yesterday at 265.8p.

Following the demerger, as expected, Esure's share price fell to 194.44p. The movement of both indicates that the two companies combined have increased in value by around one per cent this morning.

Goco, which Esure purchased just two years ago, takes on £75m of debt that will cover demerger costs and provide enough cash to pay out a dividend to esure shareholders.

Read more: Meet the companies preparing to brave London's stormy IPO market this week

Nicholas Hyett, an equity analyst at Hargreaves Lansdown was positive that Goco had a lot to offer.

"Expanding the range of products offered does present some challenges. Marketing expenses are high and the increasing importance of lower value products, such as travel insurance, limits the average amount that the group can charge per contract."

In the near term this [a high marketing costbase] doesn’t concern us too much... Overall we rather like Gocompare... whatever your marmite view of Gio Compario.

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