Energy float sparks at start

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The Independent Online
The flotation of the nuclear power generator British Energy was heading for success last night after the international share offer ended the first day fully subscribed, valuing the company at about pounds 1.5bn.

A spokesman for BZW, the Government's advisers on the sale, said that institutional investors had put in bids for the shares at between 200p and 230p compared with a range of 180p to 280p set by ministers.

British Energy, which operates the country's eight most- modern nuclear reactors, would be worth pounds 1.4bn at 200p a share and pounds 1.6bn at 230p. The price range set by the Government would value British Energy at pounds 1.26bn to pounds 1.96bn.

The spokesman rejected earlier reports that institutions were boycotting the offer and said: "This is a very satisfactory start."

He added that demand had been even across the main UK, US and continental markets. As the international book building exercise continues over the next seven days, demand is likely to increase, driving the price up towards the top end of the Government's range.

There had been worries in the last few days that the flotation might flop or only just get away at the bottom end of the pricing range amid fears about falling electricity pool prices and the ability of British Energy to run its plants at sufficiently high capacity. The highly-rated electricity analysts team at SBC Warburg only valued British Energy at pounds 1bn-pounds 1.2bn while Salamons advised clients to shun the issue altogether.

The price set in the international book building exercise will determine the final fully-paid price for small investors. The first instalment in the UK public offer has been set at 100p a share - a 5p discount to the institutional price - meaning a saving of pounds 15 on the minimum investment of 300 shares.

The first-year yield for small investors will be 22 per cent since two dividends will be payable before the second instalment falls due. For investors who hold onto their shares there is a 10p discount off the second instalment or a bonus share issue of one-for-15.

The public offer closes next Wednesday. With 1.7 million registrations received by share shops, the offer is expected to at least twice subscribed.

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