ESURE, the insurance firm that is a major employer in Scotland, has announced plans for a flotation, which could generate a bumper windfall for Glasgow-based Penta Capital.
The private equity firm and esure's founder, Peter Wood, are set to be big beneficiaries of the flotation of the business, known for high-profile brands such as Sheila's Wheels and a 50% stake in Go Compare. A source familiar with the situation said the flotation could attach a valuation of around £1 billion to esure.
In February 2010, Penta led a group of investors that backed Mr Wood in buying control of the business from Lloyds Banking Group. That deal valued esure at around £260 million.
Current shareholders are expected to sell 35% to 50% of their total holdings. The flotation could result in vendors sharing proceeds totalling £350m to £500m.
Esure expects to raise £50m to repay debt through the issue of new shares. The proposed flotation is timed to capitalise on the recent strength of the stock market.
In October, Royal Bank of Scotland sold 30% of Direct Line, also founded by Mr Wood, in a flotation that gave it a capitalisation of £2.6bn.
The success of the exercise will depend on the reception esure wins from City institutions.
Esure believes it provides an attactive prospect for investors after achieving rapid growth with a focus on lower risk sectors of the market, such as female drivers.
The Surrey-based company had 1.75 million motor and home policies in force at December 31. Pre-tax profits jumped to £115m in 2012 from £55m in 2011.
The plans will be followed with great interest in Glasgow, where esure employs 750 people in a contact centre.
Adrian Webb, esure's head of corporate communications, said: "We are completely committed to Scotland. It's a great performing office." Mr Wood added: "An initial public offering (IPO) is a natural next step for a business of esure's scale and prospects."
Mr Wood became a leading light of the industry after founding what became the hugely successful Direct Line operation in 1985. He retired as chairman in 1997.
He started esure as a joint venture with Halifax in 2000.
Penta joined with Toscafund to help Mr Wood buy out the 70% stake held by Lloyds Banking Group in February 2010, around a year after Lloyds TSB acquired HBOS.
Esure said it expected to have a free float of around 35%- 50% of its shares after the flotation.
Mr Wood said he will sell up to one-third of his holding. He has around 50% of esure's shares.
Tosca Penta Investments has around 40% and is expected to sell around half its holding.
Esure said Tosca Penta has agreed not to sell its remaining holding for 180 days after the IPO.