Anthony Hilton: Qinetiq float gets flak from all sides

Before the daily barrage against Qinetiq that has been a feature of the business press recently, I used to think it rare that good companies would suffer such a sustained public attack. Qinetiq is testing this theory to destruction.

The company was part of the British defence establishment, but in recent years the Labour government has carved it out and been fattening it up for sale. Nothing wrong with that at first glance because privatisations  can lead to better management and greater efficiency. But there was a counter-argument in The Guardian earlier this month – that a research business such as Qinetiq can easily
be destroyed by the need to deliver the consistent and quick results demanded by the stock market. Selling it might kill it – and with it
an important British asset.

Then there is flak from those in the City who think it is a scandal that private investors are not  being given the opportunity to subscribe for the shares. Instead it will be the usual allocation to  favoured customers by the investment banks handling the sale. Taxpayers own the business now – and taxpayers as investors ought to be given the opportunity to own it in the future.

And there is controversy about the opaque sale  three years ago of almost a third of the business to private equity house Carlyle. When the business floats, Carlyle will make eight times its money and there is a huge row over why the Government sold a stake – so cheaply – of a business it planned to privatise. Even the most thick-skinned minister ought to be embarrassed by that deal.

The interesting thing from Qinetiq's perspective is that, while it has a PR consultancy, for one reason or another they have not been able to get on the front foot. It may be that the issue is being run out of Whitehall and the civil servants think they can handle the PR. Or the silence may be because the consultants do not want to defend what appears to be indefensible. Alternatively the executives may have nothing to say that is interesting enough to drown out the protest.

The hostile press will probably not derail the float, but one wonders how long it will take the company to shake off the legacy of all this criticism.

anthony.hilton@haynet.com

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