Chaos surrounds Qinetiq privatisation

LONDON – The £1.3 billion privatisation of UK defence firm Qinetiq by the government was thrown into disarray in late January. Newspaper accounts first focused on the fact that only institutional investors were being offered shares in the initial public offering planned for February, not small investors.

But the scandal then grew when the British press disclosed that key members of the Qinetiq management team would be making significant sums of money as a result of the IPO, with the words 'fat cats' appearing in several headlines. In late January, the UK's National Audit Office said it would be conducting a study on how Qinetiq's privitisation was being handled, including the original sale of a 30.5% stake in the firm to US private equity firm the Carlyle Group in 2002 for just £42 million – the current privatisation will net Carlyle an estimated £150 million. Credit Suisse, JP Morgan Cazenove and Merrill Lynch are handling the IPO, while ABN-Amro Rothschild is acting as an adviser. It's the first UK privatisation since the government of John Major sold British Energy in July 1996.

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