Esure’s float to raise £1bn after strong demand

INSURER Esure is set to be worth at least £1bn when it floats on the London Stock Exchange after filling the order book for its forthcoming initial public offering (IPO).

People close to the deal said the company has already received enough orders from investors to ensure it sells the minimum number of shares.

The home and motor insurer, whose brands include Sheilas’ Wheels, intends to sell between 35 and 50 per cent of the company in the float, with a price range of between 240p and 310p.

Even if Esure sells just a third of its shares at the bottom of the price range it would be valued at more than £1bn and return £350m to owners including chairman Peter Wood and private equity backer Tosca Penta. The market capitalisation would be enough to place the company into the FTSE 250.

Wood, who founded the business in 1999, is about to begin an investor roadshow and will hope to push on towards a top-end valuation of more than £1.3bn. The order book is due to close on 21 March with unconditional trading of the shares beginning around a week later.

But some analysts have raised concerns that the objective of the IPO is to let early investors cash in rather than to grow the business. Just £50m of new shares will be issued, with proceeds used to pay off debt.

The motor insurance market is also facing an investigation from the Competition Commission, continued pressure on pricing and a new consumer-focussed regulator in the Financial Conduct Authority.

Up to 15 per cent of the offering has been aside for retail investors following strong public interest in last year’s IPO of fellow British insurer Direct Line.