The insurer announced today that pre-tax profits reached £115m in 2012 compared with £55m the previous year, and simultaneously ended many months of anticipation by announcing plans to list on the London Stock Exchange. Looks like those ‘calm down, dear’ ads featuring the late Michael Winner may have paid dividends.
The firm’s founder Peter Wood says he is hoping the float will raise around £50m in cash, which has already been earmarked for paying off a chunk of the firm’s debt, as well as a plan for investing in growth. The IPO (initial public offering) will still leave Wood as the largest individual shareholder in the business, but he will need to sell £200m worth of his own stake to attract the investment he’s after.
‘Our record of outperformance is down to our granular understanding of risk, our conservative underwriting approach and our speed in reacting to change,’ he jargonised. He added: ‘I believe we are now in a strong position to combine these advantages in a new UK insurance sector investment that combines genuine organic growth with potentially attractive returns.’
Whether or not you’re taken in by Wood’s ‘lyricism’, it is thought that the float will happen at some point in the next few weeks, hot on the heels of Direct Line – also founded by Wood. The latter’s share price has risen 20% since it was listed back in October. Investors will probably be more cautious with this than you might expect, however.
Since the £1bn valuation would make it the largest IPO to get away yet this year, it will attract a fair degree of scepticism. Add to that, in recent times, Glencore, Betfair, Ocado and Flybe have all performed pretty badly in the flotation stakes.
MT’s recommendation? Wait. If Esure gets away for £1bn, it will be good news for Wood’s bank balance but perhaps not for those on the other end of the deal…