Bottom Line: Newcomer on move

AT FIRST sight the 250p offer price set for Hozelock may look a little high, capitalising the group at pounds 59.5m and putting it on a historic multiple of 17.8 times earnings. But it comes with a strong brand name, a record pounds 5.1m operating profits and promising growth prospects.

It is raising pounds 18m from the flotation, of which about pounds 4m will be used to fund growth. The rest is for redeeming preference shares and paying off loans.

Two in three of Britain's gardeners buy Hozelock's hoses and sprinklers, which account for more than half of group sales. But it has been rapidly expanding its range of products and more than 100 items have been added to its range since it was bought out from Ropner by its management for pounds 24m in 1990.

It is looking to Europe, where sales have more than doubled in four years, for some of its future growth. Sterling's devaluation has given it an advantage over Germany's Gardena, its only pan-European competitor. It is also planning to promote its pond equipment, one of the fastest growing sectors of the pounds 110m British garden equipment market.

This move into new and expanding sectors should lift this year's profits to about pounds 6m, putting the company on a forward multiple of 15. One of the better bets of the recent new issues.