Mr Kipling group valued at £958m ahead of float

British food producer RHM was valued at £958m (€1.4bn) today as the City clamoured for a slice of the maker of Hovis bread, Paxo stuffing and Mr Kipling cakes.

Investors ordered more than six times as many shares as were on offer in RHM, formerly known as Rank Hovis McDougall, ahead of the start of conditional dealings this morning.

Shares in RHM were priced at 275p – close to the top of the range of 228p to 285p indicated by the Marlow, Buckinghamshire-based firm a fortnight ago.

Chief executive Ian McMahon expressed delight that the launch of RHM on the stock market has attracted strong support among UK institutional investors and others worldwide.

He said: “We have a clear strategy to continue RHM’s transformation into the leading UK-focused food company and we are determined to create value for our shareholders by executing this strategy successfully.”

RHM is one of the largest food companies in the UK and Ireland with sales of £1.53bn (€2.2bn) in the year to April 30.

Its other brands include Mothers Pride, Bisto gravy, Sharwood’s Asian sauces, Lyons cakes, Robertson’s jam and Golden Shred marmalade.

RHM, which employs more than 16,000 staff, is being sold by private equity firm Doughty Hanson, which bought RHM in 2000.

The offer comprises 63.8% of shares in RHM with a further 10% being granted to the financial advisers of Doughty Hanson as an over-allotment option, essentially to ensure an orderly start to life to the stock market.

Doughty Hanson will retain a major shareholding following the flotation.

RHM has pledged to plough £125m (€181.2m) of the proceeds from the flotation into its pensions fund to halve the deficit.

A dozen of RHM’s brands account for 77% of revenues and RHM provides own-label products for major supermarket chains including Asda, Tesco and Waitrose.

It is also a major supplier of food to Marks & Spencer, providing the retailer with chilled ready meals and desserts, celebration cakes and premium jams and marmalades.

The move comes at a busy time for the London stock exchange, with online poker group PartyGaming’s market debut valuing it at more than £5bn (€7.2bn) last month.