Esure gears up for market listing

CarsInsurer esure has announced plans to join the stock market in a move set to trigger a windfall for industry tycoon Peter Wood.

The owner of Sheilas' Wheels and half of comparison website Go Compare is reportedly targeting a valuation of £1 billion in the flotation.

Mr Wood, who founded Direct Line in 1985 before setting up esure in 2000, owns 90% of the company with private equity backer Tosca Penta. They will sell shares in the float but continue to have substantial shareholdings.

The internet business, which was made famous by the late Michael Winner's "Calm down, dear" television ads, was created out of a joint venture with the Halifax before Lloyds Banking Group sold its 70% stake in 2010.

Management will now embark on a roadshow to attract investors prior to what is set to be the London market's biggest flotation of the year so far.

Confidence in the initial public offering (IPO) market has been lifted by the successful listing of housebuilder Crest Nicholson, which was priced at 220p or £550 million on February 13 and is now trading at 264p.

Announcing the float plans alongside full-year results, Mr Wood said: "An IPO is a natural next step for a business of esure's scale and prospects."

With 1.25 million in-force motor policies and 500,000 home policies at the end of 2012, the Surrey-based company more than doubled pre-tax profits to £115.5 million last year.

It said its conservative approach to underwriting meant 87% of its motor policy holders were over 30 years of age, while 98% of in-force home policies are located in areas considered to have low risk of flooding. And as 95% of Shelias' Wheels policyholders are female, this has minimised the price disruption caused by the recent introduction of a new gender-neutral pricing regime across the industry.

The float, which is expected to place between 35% and 50% of shares in public hands, will raise £50 million towards paying down debt. Around 10% of the company is owned by other directors, as well as current and former staff.