Esure plans to float GoCompare.com for potential £650m

Insurer Esure has begun working on plans to spin off its financial services comparison website GoCompare.com via a flotation on the London main market.

The FTSE 250 company said the spin-out had the potential to enhance business growth, performance and shareholder value, after a strategic review of the website in June.

The demerger is subject to shareholder approval, and if voted through in October, could take place in the final quarter of this year.

Various analysts put a potential value on GoCompare.com of between £400m and £650m.

Esure chairman Sir Peter Wood, said: "Following the strategic review and the appointment of Matthew Crummack as CEO of GoCompare.com, we believe that a demerger of GoCompare.com from Esure will allow both entities to thrive and reach their full potential.

"Esure and Gocompare.com are distinct businesses, which are both underpinned by strong brands. A demerger will allow the separate management teams to focus on their independent strategies, and also enhance their ability to align senior management incentives …The Esure board intends to recommend that Esure shareholders vote in favour of the demerger."

The demerger will create two separately listed companies less than two years since Esure took control of the website, a provider of motor and home insurance and a UK price and product comparison website, which will allow management to focus on their strategies independently.

The company said the demerger would improve GoCompare.com's ability to attract technology managers, who would join a stand-alone entrepreneurial digital technology business.

GoCompare Holdings will be re-named GoCompare.com Group and will have a separate listing on the main market of the London Stock Exchange, and its shares will be distributed to Esure shareholders through an interim pro-rata dividend.

Prior to the demerger, GoCompare.com will draw down on a new £75m debt facility and pay Esure a cash dividend of £63m, which will cover fees and provide headroom above the company’s solvency capital requirements.

Following the demerger, the current Esure dividend policy will not be amended, which targets a base dividend of 50% of profit after tax and a special dividend, if it has capital. The fees will not impact the 2016 final dividend.