Peter Wood made his first fortune founding the Direct Line insurance business. Photograph: Frank Baron for the GuardianInsurance tycoon Peter Wood has landed a windfall of nearly £200m after taking Esure public in London's biggest flotation of the year so far.
Esure, which insures about 5% of Britain's drivers, was valued at £1.2bn in the public offering on Friday. It is a dramatic increase in value since Wood led a management buyout of the group in 2010, buying a 70% stake from state-backed Lloyds Banking Group, in a deal which valued the insurer at just £260m.
Wood, who still owned almost half the company before Fridays' float, sold about a third of his stake for £198m. His remaining 31% stake is worth £390m at the current share price.
Esure is best known for producing jingle- and catchphrase-heavy TV adverts for its brands Sheila's Wheels and Esure, and its joint venture Go Compare. The Esure brand used the late Michael Winner to deliver the punchline: "Calm down, dear, it's only a commercial."
Wood can be held personally responsible for those adverts, having always refused to hire a marketing director and taking charge of publicity campaigns himself.
He has led the company since setting it up in 2000, with backing from the Halifax. But the bank was forced to sell its 70% stake in the insurer, in the wake of the rescue merger of Halifax-owner HBOS with Lloyds.
Wood's subsequent management buyout was backed by Tosca Penta Capital, a fund managed by Penta Capital. Tosca sold shares worth £304m in the offering and retains a 12% stake in the business.
Wood will stay on as executive chairman with a £730,000 annual salary, private health insurance and his own driver for business and personal use. He has said: "This is my seventh insurer – and my last. I will be here for as long as I can make a contribution. Or until Stuart [Vann, chief executive] taps me on the shoulder and says: 'Time for a bit more golf.'"
Vann sold £2.9m worth of shares in the offering and retains a 0.5% stake in the business. Around 1,000 other employees will share a £3m bonus, following the flotation, paid in shares, which can be sold in three years' time.
Wood made his first fortune founding the Direct Line insurance business in 1985 in conjunction with Royal Bank of Scotland. He left the business after a falling out with the bank and went on to found Esure. He has also set up insurance businesses in Spain and the US, and last year the Sunday Times Rich List estimated his personal fortune at £500m. Among his holdings outside the insurance industry is a significant stake in model train and Scalextric group Hornby.
The successful IPO gives another boost to London's new listings market. Also on Friday, windfarm investment fund Greencoat UK Wind raised £260m in a share offering. UK estate agent Countrywide, meanwhile, has seen its shares rise by about 11% since its stock market debut on Wednesday.
Esure shares were sold for 290p each, towards the upper end of the 240p-310p range. They jumped 8.6% higher on their debut and are now trading at 305p.
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