Exco's 175p flotation price values company at pounds 215.5m: Profits forecast increased because of present volatility in money markets

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The Independent Online
THE international moneybroker Exco, based in London, will float next month at a price of 175p per share, valuing the business at pounds 215.5m, writes John Willcock.

The offer price has been pitched at about eight times prospective earnings to yield 6 per cent growth, a level encouraging analysts to suggest that the shares will go to a premium.

Increased volatility in the money markets due to interest rate uncertainty prompted Exco to increase its profits forecast for the half-year to 30 June yesterday by pounds 500,000 to at least pounds 27.5m.

If it had already been listed, Exco said that it would have recommended a dividend for 1993 of 8.4p net per ordinary share. Dealings start on 19 July.

The float will enable the administrators of British & Commonwealth, Exco's ill-fated former parent, to sell their remaining 40 per cent holding in the broker. The administrators, Ernst & Young, sold 60 per cent of Exco in 1992, valuing the company at pounds 75m.

Another 3 per cent is being sold by Flemings and Gartmore while Exco's remaining institutional shareholders and 150 employees are keeping their stakes.

Exco's chief executive, Ron Sandler, brushed aside worries that choppy stock market conditions might have derailed the float or forced a cheap price.

'There has been a lot of talk about new issue fatigue, but the institutions have been eager to hear our story,' he said. 'Trading conditions are very good. Volatility in global fianncial markets is very beneficial to our business.'

(Photograph omitted)

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