MDIS to float at pounds 260m: Biggest UK valuation for computer services company

Click to follow
The Independent Online
DETAILS of the placing and offer of shares in McDonnell Information Systems confirmed it as the UK's biggest computer software and services flotation. The price of 260p a share values the company at pounds 260m, with 73 per cent of the equity being made available.

MDIS, a pounds 121m management buyout from McDonnell Douglas a year ago, will use net proceeds of pounds 107m to pay off debt. Jeremy Causley, chief executive, said the overhang had put off some potential clients, especially on the Continent.

MDIS sells computer software and hardware in a wide range of markets, with nearly 60 per cent of its sales in the public sector. It has taken advantage of contracting out by supplying two-thirds of the UK's police forces and about a third of district councils, for example.

With more customers, especially in the public sector, looking for additional services, MDIS believes there is significant potential for growth from its existing client base. It also hopes to expand its overseas business.

Turnover has fallen during the past three years, but operating profit rose from pounds 17.9m in 1991 to pounds 22.3m in 1992. Last year MDIS spent about 12 per cent of turnover on research and development, written off against profits.

Stock market dealings will start on 24 March.

(Photograph omitted)