Government is privatising defence firm QinetiQ

Government is privatising defence firm QinetiQ

	Published : Sat, 14 Jan 2006 02:05 By : Andrew Stead Print this Story

LONDON: The British government is readying to float defence research company QinetiQ Group through an IPO on the London Stock Exchange. The government owns majority stake in the company and it said the IPO will take place possibly in February, depending on market conditions.

This will be the biggest privatisation of a state-owned venture since Prime Minister Tony Blair's government came to power in1997, according to analysts, who valued the offer at around $1.8 billion.

Defence secretary John Reid in a statement to the parliament said the ministry of defence and its Washington, U.S.-based strategic partner, private equity firm The Carlyle Group, will continue to retain significant stakes in the company. He said the government will have a special share in order to protect the country's defence and security interests.

While the defence department holds 56 per cent stake, the Carlyle Group has 31 per cent holding, while staff and management hold the balance 12 per cent.

QinetiQ, based in Farmborough, southwest London, is part of the government's Defence Evaluation and Research Agency providing technology assistance to the country's armed forces. Its products include a system to detect hazards on airport runways, remotely controlled mine clearance boats and computer security systems to protect against fraud. It has 9,000 employees on its rolls and also caters to the needs of overseas clients like the Pentagon and the U.S. Department of Homeland Security and several private sector firms.

It is estimated that Carlyle's investment of 34 million pounds in 2002 is worth 300 million pounds now.

QinetiQ has a pension deficit of 145 million pounds and debts of over 300 million pounds. Part of the IPO proceeds is expected to used to bring down the pension deficit and the debt.

The proposal brought criticism from the Tories, who said the government is trying to shore up its reducing public finances. The Liberal Democrats demanded a scrutiny by the National Audit Office.