Egg scrambles for flotation

UK insurance giant Prudential has decided to press ahead with the flotation of Egg, in the face of a depressed technology market that has already seen three hi-tech companies drop similar plans at the last minute.

Egg shares will be offered on 12 June at between 130p and 175p, valuing the company at between £1.1bn and £1.4bn.

The flotation is going ahead at a discount, however. The price range for shares is some 40p to 50p less than had been predicted before hi-tech stocks plunged last week and just half the original estimates made when the flotation plans were revealed in February.

The offer sees 18 per cent of Egg equity made available for retail and institutional investors, which is expected to generate between £198m to £252m in cash. At least £50m will be earmarked for staff share options.

According to reports, members of Egg's senior management team would have left the company if the planned float had not gone ahead.

Egg and Prudential customers will be able to apply for up to £1000 worth of shares and a mini-prospectus will be posted on Egg's website tomorrow.

Mike Harris, chief executive of Egg, said: "Flotation will enable us to maximise the potential for growth in the business in the UK as well as internationally, and will help us retain and incentivise our people."

Analysts say that the number of shares in the offer is not much more than the minimum necessary for Egg to fulfil promises to staff on stock options, and to make future stock-swap acquisitions and investments viable.

Although yet to make a profit, Egg is a high-profile internet business with a proven ability to attract customers, and once leading institutions hinted they would be interested in buying the stock, the flotation was never in much danger of being scrapped.

Richard Holway, managing director of market analyst Richard Holway, said: "It would have taken a complete market meltdown for the offer to have been scrapped.

"The Egg flotation has a lot of similarities to Freeserve and at the suggested price range they're probably as good value as anything at the moment. As an Egg customer I'll be applying for my £1000 worth of shares."