Detica goes for cut-price float

The IT services business Detica was yesterday forced to admit that investors had given its upcoming flotation a poor reception after the company was valued at about £14m less than it had hoped.

Tom Black, the chief executive, said he was not disappointed with the valuation, given the ongoing volatile stock market conditions.

"To be honest, I'm not really disappointed. The market moved quite a lot whilst we were on our roadshow, it's come down 10 or 12 per cent, and I think under those circumstances you have to be realistic about pricing," he said.

Detica, which is based in Surrey and was formerly known as The Smith Group, said that its shares would be priced at 400p each, raising £13.3m of new money net of expenses, and valuing it at £88.2m.

Two weeks ago, Detica said its flotation would be priced at 440p to 510p, a move that would have valued the company at about £102m, if the shares had been priced at 475p each.

"We've raised the cash we wanted to raise. We've got ourselves in a position where staff's shares will be liquid and it gives us a currency we can use to develop the business," Mr Black said.

Shares in Detica are expected to start trading Tuesday.

Mr Black, who is selling about £2m worth of shares in the flotation, will hold a 7.9 per cent stake in the business. The venture capital firm Candover is selling half its holding, leaving it with a 16.3 per cent stake.