Itnet five share pounds 30m

Click to follow
The Independent Online
FIVE directors of ITNET will share a bonanza of more than pounds 30m when the information technology group comes to the market early next month.

Bridget Blow, the chief executive who led ITNET's management in a buyout from food and drink group Cadbury Schweppes in 1995, holds a stake which is expected to be worth at least pounds 8m. Three other executive directors will be worth pounds 6m each while the Roger Catto, the finance director who joined the company in 1996, will pocket about pounds 1.7m.

The flotation will also benefit most of ITNET's 1,500 employees, who currently own 25 per cent of the shares. Their combined stake is likely to be worth at least pounds 30m.

The company's value has risen rapidly since the management buyout, reflecting the market's growing demand for information technology stocks.

At the time of the management buyout, Cadbury Schweppes sold the business for just pounds 32.5m. When pricing details are confirmed in a few weeks the company is expected to be valued at between pounds 150m and pounds 200m. This includes about pounds 30m of new money which the company will use to redeem preference shares and strengthen its balance sheet.

The company stressed that the directors would not be selling more than 40 per cent of their stakes in the placing. Its venture capital backers, led by 3i, are also likely to hold on to some of their shares.

ITNET operates in the fast-growing area of IT outsourcing, where it takes over the running of computer departments for corporations or local councils. It is also expanding into business process outsourcing, having recently won contracts to handle revenue collection for Hackney and South Buckinghamshire councils.

Ms Blow said the company "has reached the stage in its development where it will benefit from the advantages of being a listed company". She said the flotation would strengthen the company's balance sheet, allowing it to bid for larger contracts, and also give it the firepower to make acquisitions in the future, though she stressed that no deals were imminent.

ITNET normally concentrates on contracts worth between pounds 1m and pounds 20m a year, which tend to run for between three and five years. The company's largest customer is Birmingham City Council, which accounts for 13 per cent of its revenues.

Turnover has grown from pounds 58.5m in 1995 and pounds 81.7m last year, while operating profits have risen from pounds 4.0m to pounds 5.9m. Mr Catto said he expected the company's growth rate to accelerate as it was freed up to pursue more contracts.

Analysts at Dresdner Kleinwort Benson, the stockbroker which is handling the flotation, believe ITNET could achieve revenues of pounds 100m and operating profits of pounds 7.3m in 1998.

Analysts said the company was likely to attract a high valuation. Shares in its closest competitors, outsourcing groups FI and Capita, have both more than doubled in the past year.