London's IPO market passed its latest test with flying colours today as Esure shares rose by almost 9% on their debut.
Banks advising the motor insurer priced its shares at 290p, valuing the company at £1.2 billion.
More than 64 million shares changed hands during the first couple of hours of trading, helping its shares climb higher than 315p, before settling at 306p.
Esure’s shareholders, including founder Peter Wood and Tosca Penta Investments, will pocket a combined £554 million from the stock market flotation. Wood, who will receive about £198 million, will remain the company’s largest shareholder with a stake of 30.9%.
“Today’s pricing is a ringing endorsement of Esure’s strengths and future prospects and we welcome all of our new shareholders, both institutional and retail, as co-investors in the next exciting phase of our development,” he said.
“As a premium listed company, Esure will have the right corporate platform for development, and it is our task to maximise the opportunities that we see ahead of us for the mutual benefit of all our shareholders.”
Esure’s brands include Sheila’s Wheels and it also owns 50% of Go Compare. The company’s stock market debut comes two days after the country’s biggest estate agent, Countrywide listed on the London Stock Exchange at 350p. Its shares have since risen by about 11%, replicating the success of other recent IPOs such as Direct Line and Crest Nicholson. Today’s news is likely to come as a blow to Lloyds Banking Group, which sold a 70% stake in Esure for just £185 million in 2010. That stake would now be worth around £840 million.
Stuart Vann, Esure’s chief executive, added: “The strong reception for our offer is a reflection of investor appetite for differentiated, high-quality exposure to the UK insurance sector.”
Rival insurer Hastings has played down rumours it will follow Esure to the public markets. Boss Gary Hoffman said the company had no immediate desire to list but left the door open over the longer term.
“There are no plans for an IPO,” he said. “We’ll keep all options open.”
Hastings is chaired by entrepreneur Neil Utley, who has his own record label, Nusic Sounds. Last month, Utley was banned from working in the Lloyd’s of London market for two years and ordered to pay £130,000 in costs over failings at Equity, a motor insurer he once ran.