Float to value Admiral at about £710m

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The Independent Online

Admiral, the UK motor insurer, will set the price for its London market flotation at about 275p today, giving the company a market value of £710m, according to sources close to the deal.

Admiral, the UK motor insurer, will set the price for its London market flotation at about 275p today, giving the company a market value of £710m, according to sources close to the deal.

The price is in the middle of the 245p to 300p range at which the firm marketed the offering to institutions earlier this month, and will make Admiral the largest UK initial public offering this year.

Unconditional trading in the stock will begin in five days.

Admiral, which will officially announce the price this morning, refused to comment yesterday evening, and there is still the possibility that the price will be revised.

The float will see about 32 per cent of Admiral's share capital sold by existing investors, of which the largest group is Admiral's 1,500 employees who currently own some 47 per cent of the company. The staff are expected to collect an average windfall of £37,000 from the IPO.

The float will also provide a healthy payday for Admiral's private equity investors - XL Capital, Munich Re and Barclays Private Equity - who backed Admiral's current chief executive, Henry Engelhardt, in a management buyout in 1999. At the time, the company was valued at just £80m.

The company has grown rapidly through the expansion of its internet brands, elephant.co.uk and confused.com, and its women's motor insurance company, Diamond.

Mr Engelhardt, who co-founded the group in 1993, has maintained that Admiral could consider the option of selling a further 15 per cent of the company if demand for the shares is strong. His stake is expected to be worth about £100m on flotation.

Admiral targets young drivers living in urban areas who do not have a full no-claims bonus. Its interim results showed that its core profit was up 30.5 per cent to £45.3m, while turnover rose 30.2 per cent to £269.3m in the six months to the end of June.

The company generates 70 per cent of its sales over the internet and now has a total of 942,000 customers.

Its flotation is being handled by Merrill Lynch and Lazards. Both advisers declined to comment last night.

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