AEA shares roar up to 323p

The Government's sale of the nuclear industry ran into fresh controversy yesterday after shares in AEA Technology, the last state asset to be sold before the election, raced to a 15 per cent premium on the first day of dealing.

The shares ended the day at 323.5p, compared with their offer price of 280p, valuing the company at pounds 257m - some pounds 33m more than the Government raised from the flotation. A total of 20 million shares changed hands and at one stage they were trading at 332p.

The spectacular rise in the share price brought back memories of the Government's first stab at privatisation in 1982 when Amersham International, another spin-off from the Atomic Energy Authority, roared to a 37 per cent premium after being underpriced.

Peter Watson, AEA Technology's chief executive, rejected suggestions the company had been sold too cheaply. "When the process started there was a lot of uncertainty over how to value us," he said.

The Government originally set the price range at 230-270p but increased this is 240-280p when it became obvious that demand would be heavy.

The offer to intermediaries - brokers through whom private investors had to apply for their shares - was six times oversubscribed. The average allocation was set at a fifth of the number of shares applied for while large applications were capped at pounds 7.5m.

AEA Technology, the engineering and consultancy arm of the Atomic Energy Authority, employs just over 3,000.

The company made profits of pounds 16m last year on sales of pounds 266m and is forecast to increase profits this year to about pounds 22m. That put the shares, at the offer price, on an earnings multiple of 14.5.

Mr Watson ran into controversy over an earlier privatisation of the train leasing company Porterbrook, in which he stands to make a pounds 4m profit, following its proposed sale to the bus group, Stagecoach, just nine months after it was sold by the Government.