Thistle to float for just pounds 1.2bn

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The Independent Online
The Thistle hotel chain prospectus this week is expected to value the company at pounds 1.1bn to pounds 1.2bn, significantly less than the pounds 1.5bn some insiders were privately hoping for.

The prospectus is also expected to predict pre-tax profits of not less than pounds 100m in its first year as a listed company. Its six-month results to 14 July showed a profit of 24.1 per cent before tax and exceptional items, an 88 per cent increase on the same period a year earlier.

The 100-property chain - the largest UK-only hotel group and the biggest player in London - is being floated by its New Zealand owners, Brierley Investments.

Observers say the company's advisers, Merrill Lynch and Barings, have told it a price in that range would receive strong support from investors. A final pricing decision will not be made until Tuesday, however.

The company is thought to have chosen this time to go to market because institutions that cashed out of Forte when it was taken over by Granada earlier this year are eager to re-balance their portfolios.

It is also playing into a strong domestic market for hotel rooms. A recent study by Pannell Kerr Foster Associates, a management consultancy, predicted that London alone would need 10,000 new rooms by the turn of the century.

The City has already pumped about pounds 500m into the sector, mainly through the flotations of Jarvis Hotels - which got off to a strong start but later slumped - and Millennium & Copthorne.

Thistle is likely to follow an organic growth strategy, adding 2,000 new rooms in the next four years, half of them in London.

The company claims to have no single flagship. Its best known property is the Tower Thistle, beside Tower Bridge, which has a commanding view but, according to architectural critics, adds little of merit to the London skyline.