Scotia flotation set to raise 40.6m pounds: Founder and family trusts will net pounds 38m

SHARES in Scotia Holdings, the pharmaceutical group renowned for its evening primrose oil, have been priced at 290p, at the top end of expectations.

The flotation of 14.5 million new shares - 22.5 per cent of the company - which has been up to five times oversubscribed, will raise pounds 40.6m. The move will value Scotia at more than pounds 181m when trading starts on 25 October.

David Horrobin, Scotia's founding chief executive, and his family trusts, will control about a fifth of the equity after the flotation. That stake is worth more than pounds 38m at the offer price.

But Mr Horrobin, and his fellow directors and investors, who before the sale owned 92 per cent of the company, have agreed to hold on to their shares for at least 180 days.

Mr Horrobin said that the decision was an expression of confidence in Scotia's future.

Kleinwort Benson, lead manager of the issue, said the shares on offer had been placed with institutional investors in the UK and international investors.

Since it was founded by Mr Horrobin in 1978 Scotia has developed a core business centred on medicines based on fats - 'lipids' - a relatively neglected area for pharmaceutical businesses.

Its initial focus was on oil from the seed of evening primroses, but it has since expanded its range so that sales are almost equally split between consumer nutritional products and four prescription products.

The former are sold, in about 40 countries, by outside distributors, while the prescription products are handled by licensees.

Part of the flotation proceeds are to be used to repay debts of about pounds 7.7m. The remainder will finance future product development, especially in lipid technology, including clinical trials, manufacturing and the purchase of raw materials.