Fairhaven offshoot's market value will equal its own

THE OIL and gas engineering company OGC International is to be floated with a market capitalisation as great as that of its parent, Fairhaven International.

Forty per cent of OGC is being floated through a placing and offer for sale that values the company at pounds 78m.

Fairhaven itself, which at present owns 100 per cent of OGC, was capitalised at exactly the same figure when it closed yesterday at 32p.

The 24 million shares on offer are priced at 130p. Half have been placed firm with institutions and the remainder are being offered for sale.

Fairhaven, which is 70 per cent owned by Fred Olsen, the Norwegian shipping tycoon, will retain 60 per cent of OGC.

Philip Stephens, a director of UBS, the broker to the issue, said that the listing helped Fairhaven to release the hidden value of its assets. Fairhaven is registered in Bermuda and its continued 100 per cent ownership of OGC was felt to be a barrier to the growth and development of the Aberdeen-based oil services company.

John Hyslop, managing director of OGC, said the company was keen to transfer its expertise in offshore oil construction and maintenance to more projects onshore. 'In any event, the oil industry is quite healthy despite what you hear,' he added. There were at least 50 fields still to be exploited in the North Sea.

The 130p offer price puts OGC on a historic multiple of 11.9 earnings, based on pre-tax profits of pounds 10.5m in 1992. The company said it would have paid a total dividend of 4.4p, giving gross dividend yield of 4.2 per cent at the offer price.