Fortune brews for Whittard bosses

The directors of Whittard of Chelsea, the specialist tea retailer, will find their stakes in the company worth pounds 15m when it comes to the Alternative Investment Market next week. The 270 staff will benefit from a free share hand-out worth a total of pounds 200,000.

Whittard's shares have been priced at 148p, valuing the company at pounds 24.5m. The listing will raise pounds 8.5m, which will be used to repay the venture capital groups who supported a buyout in 1988, and to add more branches to its network of 79.

The biggest beneficiaries of the flotation are chairman David Gyle Thompson and managing director Will Hobhouse who will hold 58 per cent of the shares following the flotation. Mr Gyle Thompson's shares will be worth pounds 7m, while Mr Hobhouse's stake will have a paper value of pounds 6.5m. It is the second fortune Mr Hobhouse, 39, has made from a stock market flotation. He was managing director of Tie Rack when it was floated in 1987. "You could say that I have no mortgage on my house," he quipped yesterday.

The company plans to add 10-15 new shops a year for the next five years. Next month it will open a new shop near Victoria in London which will roast coffee on site.

Later in the summer it will open a larger format in London's Baker Street featuring an expresso bar,.

Whittard has 19 stores in Japan operated under a licensing agreement. It is seeking franchise partners in the US and arrangements for stores in Thailand and Taiwan are also under discussion.

"Whittard has got 4.9 per cent of the speciality coffee market and 14 per cent of the speciality tea market," Mr Hobhouse said. "We believe we have only just started."

Whittard was founded in 1886 by Walter Whittard, selling teas and coffees to local businesses. In 1973, the then owner Dick Whittard sold the business to interests controlled by Mr Gyle Thompson. Mr Hobhouse joined in 1988.

As well as teas and coffee the company sells ceramics such as teapots and mugs as well as confectionery and coffee making equipment.

Last year Whittards made profits of pounds 2m on sales of pounds 18m. This represents a fairly rapid expansion for a company which in 1993 recorded profits of just pounds 233,000 on sales of pounds 7.1m.

Although the proceeds of the placing will be pounds 8.5m, around pounds 6m will be paid to venture capital investors. A further pounds 450,000 will be swallowed up in flotation costs.

The remaining pounds 2m will be used to fund the expansion of the business.

Just over 38 per cent of the shares are being floated. Dealing will start on Thursday.