Punch heads for £2bn flotation

PUNCH Pub Company has confirmed it plans to list with a price tag of more than £2bn in a move valuing entrepreneur Hugh Osmond's stake at £45m. Osmond, who floated Pizza Express in 1993, built up the chain of 4,200 pubs with venture capital backing over the past five years and is reputed to have amassed a £150m fortune from it. Part of that comes from the estimated 7% stake of the floated company he is expected to hold.

Pricing details of the flotation are expected to include a multi-million-pound bonus scheme for chairman Giles Thorley, brought in last year from Nomura's Unique Pub Company to guide it through a flotation. Osmond's fellow founding directors Roger Myers and Alan McIntosh will also scoop enormous paper fortunes from the float. Osmond has already cashed in a stake worth about £50m from his pubs empire.

While lead adviser to the float Merrill Lynch was giving few details, it is expected to consist of about £1.5bn in debt and £600m in equity. The group aims to raise about £250m of new funds. A roadshow will be held in May with the listing expected later that month.

Some analysts have been sceptical about investing in a business that has been heavily securitised. Along with its sister company Punch Retail, the group has raised more than £2bn secured against the expected rental income from tenants and leaseholders as well as Punch's own profits.

That structure is regarded by rivals as making it far tougher to churn the estate - sell off poorly performing sites and buy up better ones. Laurel, which last week sold 1,860 pubs to Enterprise Inns for £875m, was keen to avoid a securitisation as it thought such deals would put off potential buyers. The sale put Enterprise ahead of Punch as Britain's biggest landlord.

The float will leave Osmond's 1,000-strong managed pubs business, Spirit, awaiting a flotation or trade sale. No timetable has been set for disposal of the group, which was allocated £650m of debt when the managed and tenanted estates were demerged last year.

Punch's float will be closely watched by Pubmaster, which like Laurel is backed by venture capital.