High price hint for Centrica

British Gas brushed off recent pessimism about its share price performance yesterday when shares in its soon-to-be-demerged supply division, Centrica, began trading near the top end of analysts' expectations on the unofficial "grey market", writes Chris Godsmark.

Centrica shares ended at 70.5p, valuing the company at almost pounds 3.2bn. Official trading begins next Monday, with the split from British Gas to be put to a shareholders' vote at an EGM tomorrow.

Yesterday's indicative price suggests the misery for 1.8 million small investors could be overdone. Previous estimates of Centrica's value had varied wildly, with some analysts putting the share price as low as 25p and others higher than 90p.

Simon Flowers, head of utilities at NatWest Securities, said: "The stock market has come to the conclusion that the assets are quite desirable and the liabilities are not as high as was previously thought."

Shares in BG, the pipeline business, closed on the grey market at 172.5p. British Gas shares were unchanged at 243.5p.