Net frenzy looks likely to push Lastminute.com valuation above £450m

Internet investment frenzy intensified last night as the flotation value of Lastminute.com seemed likely to surpass £450m, a 50 per cent premium to the £316m mid-price published in the company's prospectus earlier yesterday.

Internet investment frenzy intensified last night as the flotation value of Lastminute.com seemed likely to surpass £450m, a 50 per cent premium to the £316m mid-price published in the company's prospectus earlier yesterday.

Already a top internet brand along with Freeserve, Lastminute yesterday unveiled plans to raise £62m through a global offer of 33 million new shares with a mid-price of 210p. Over 1.1 million registered Lastminute subscribers will be eligible to buy shares in the initial public offer (IPO). Should 10 per cent of Lastminute's registered users opt to buy stock that would set a record for retail participation in a British dot.com IPO. But with retail investors expected to receive only some 20-25 per cent of the total shares on offer, individual allotments could end up being worth only a few hundred pounds.

"This is one of the biggest [allotment] percentages to go to retail investors," said Marta Lane Fox, the 27-year-old co-founder and chief operating officer of Lastminute. The expected stock shortage saw spread betting firms in the City offering a 495p-505p range - a whopping 138 per cent premium to the mid-price.

Demand could be further fuelled by investors making multiple share applications related to each separate e-mail address a registered user holds. Prospective investors have until 10 March to complete share applications with trading due to begin in London and New York on 21 March.

Among Lastminute's star-studded lineup of backers are chip giant Intel, Deutsche Telekom and BAA. Orange, the number three mobile operator, yesterday agreed to acquire 1.65 million shares at the offering price. "We have taken the view that we shouldn't just look for money, but for money with something additional to it," said Ms. Fox, who will be sitting on a paper fortune of over £25m after the float. Financial results for the three months to December show Lastminute collected commissions of £409,000 on sales of £4.3m, double the amounts in the previous quarter. Losses for 1999 were £10.9m.

Morgan Stanley Dean Witter is lead manager of the offering.