Energis shares priced below 300p for debut

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Shares in Energis, the business telecoms group owned by National Grid, will be priced well below the 300p barrier, valuing the company at around pounds 900m, when they begin trading on the stock market this afternoon.

Executives from the two companies, led by David Jones, the Grid's chief executive, and Mike Grabiner, chief executive of Energis, set the conservative flotation price last night after a marathon marketing effort to potential investors in the UK and US.

The flotation is expected to value each Energis share at about 290p, compared with an anticipated range of between 250p and 325p. Analysts last night suggested the share offer had been three-times oversubscribed after the bookbuilding process, but pointed to stronger interest from the US than the UK.

The Grid is selling 26 per cent of Energis' share capital in a complex arrangement, but could lift this to almost 30 per cent depending on demand. Today's price would raise enough proceeds to pay off a pounds 205m debt from Energis to the parent company.

The likely final float price is a blow to hopes that Energis might float closer to the pounds 960m, top of the valuation range. But it will be hailed by the Grid as a vindication of its original decision to invest pounds 480m in the venture, which wraps telephone wires around power cables.

Energis has been boosted by the Government's U-turn in Brussels last week over the UK system of telecoms competition. Ministers have agreed to adopt an European Union directive which would allow homes in the UK to nominate a rival carrier of choice to BT.

Though Energis is not expected to enter the residential market, it could gain more traffic on its network from other operators after 2000, when the directive comes into force.