 Qinetiq's military products are expected to attract strong demand |
Shares in Qinetiq, the defence firm being floated by the government, began conditional trading on Friday. The shares sold were priced at 200 pence each, giving the firm an initial market valuation of �1.3bn ($2.3bn).
The flotation has attracted criticism because of the amount of money that US investor, Carlyle Group, will make from the privatisation.
Government ministers have defended the listing, saying taxpayers are getting value for money.
By the close of trade on Friday, Qinetiq shares were trading at 213p ahead of full trading which will begin on Wednesday.
Investor interest
Carlyle, which owns 31% of the business, stands to make a profit of up to �370m from the flotation from its original �42m investment.
The National Audit Office (NAO) is investigating whether the Ministry of Defence (MoD) - which currently owns 56% of the business - sold shares too cheaply to the private equity firm in 2002.
The MoD's stake will be cut to about 23.7% following the flotation, while the Carlyle Group will own about 12.9% of the business.
The float is the first privatisation by the Labour government since it came to power in 1997 and has attracted strong interest from investors.
Lord Drayson, the defence procurement minister, defended Carlyle Group's involvement, saying it had brought in extra investment and helped to transform the business.
"The real winners here are the taxpayers," he told the BBC, adding that he welcomed the NAO's review.
"It is an important privatisation and it has been done in a new modern approach. The process has been consistent with the NAO code of conduct for privatisations."
Diverse clients
The listing in London will raise �617.5m, �150m of which will be kept by the company.
The company's products include military sensors and software, and banking security systems, while its clients range from the Pentagon to jet engine firm Rolls-Royce and credit card company Barclaycard.
Qinetiq employs more than 9,000 people across the UK.
In the year to 31 March 2005, it made operating profits of �69.7m from a turnover of �872.4m.
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The real winners are the taxpayers
