Carlyle quits Qinetiq with £240m profit

The US private equity firm Carlyle Group sold its remaining 10 per cent stake in the British defence research company QinetiQ for £140m yesterday, securing it a total profit of at least £240m from its four-year investment in the company.

Carlyle paid some £150m for a 30 per cent stake in QinetiQ, the former state-owned Defence & Energy Research Agency, in 2003. Around 2 per cent of its stake was given to directors as options, and the company then cashed in just under 18 per cent of its holding - for around £250m - when the business floated a year ago.

Its remaining 10.3 per cent stake was subject to a lock-in clause, which prevented it from selling any of its shares in the first six months after the float. However, when the lock-in came to an end last summer, QinetiQ's shares had fallen some 20 per cent.

The stock has steadily recovered over the past few months, and recently passed back through the 200p mark at which the company floated. Carlyle said yesterday that its stake had been placed in the market at between 200p and 209p a share.

Carlyle also announced that Glenn Youngkin, its non-executive representative on the QinetiQ board, would be standing down. The group said it had no plans to replace him as it already had five other non-executives on the board.

Graham Love, the chief executive of QinetiQ, issued a statement thanking Carlyle for its input into the group over the past few years, claiming it had been instrumental in growing the company's presence in the US by acquisition, a strategy which the business is continuing to follow.

QinetiQ's largest shareholder remains the Ministry of Defence, with some 19 per cent of the company. It is also believed to be seeking an exit from the business, and speculation has increased that it may act soon, now that the shares have passed their float price again.

It is not known who Carlyle sold its stake to. Other significant shareholders on the register at the moment include the chief executive, whose 1.6 per cent stake is worth more than £20m.

The announcement of Carlyle's exit came after the close of the market yesterday. QinetiQ's shares closed the day up 1p at 209.25p, giving the company a market value of £1.38bn.