Companies Clamour for Slice of Website Pie ; IN ASSOCIATION WITH Rensburg Sheppards But Pounds Bn Valuations Smack of a Return to the Dot Com Era

By HOLLY WILLIAMS Business Correspondent

THE consumer desire to secure the best possible deal on everything from car insurance and energy bills to a new fridge freezer is creating a booming business for websites that offer price comparisons.

These so-called "aggregators" have tapped into the growing need for a service to trawl through the many products and services on offer and ultimately help save consumers money - and it appears to be paying off. At least, it certainly is for the sites themselves.

One of the biggest players in the sector, Moneysupermarket.com, is planning a stock market flotation which could value the company at around pounds 1bn. Meanwhile, car insurance specialist Confused.com is currently being valued at between pounds 500mand pounds 1bn as its parent group, insurance firmAdmiral, looks to sell a stake in the site.

As the values bandied around reach billionpound territory, it seems a raft of competitors are planning to jump on the bandwagon in a bid to secure a slice of what appears to be an increasingly profitable pie.

Over-50s firm Saga is to launch an insurance price comparison site targeted at older consumers within the next few months, while Tesco's personal finance business is also understood to be hooking up with long-term partner Royal Bank of Scotland to bring Tescocompare.com to market before the end of the year.

Such is the size of the market that internet analysts estimate that more than 15m people use a comparison site each month in the hope of saving cash. Moneysupermarket.com alone notched up 3.2musers in April, up 41% on the same month the previous year, according to Neilsen/NetRatings.

The market is clearly a growing one, but the high-earnings multiples mentioned of late smack of a return to the dot com era, when firms could fetch a sky-high price tag without having the earnings to back it up. Confused.com is being valued by analysts at Lehman Brothers at a cool 20 times expected 2008 earnings. As traditional valuations are calculated on a 13 or 14 times earnings basis at best, it appears to be attracting a substantial premium, based more on future potential than current profitability.

Hargreaves Lansdown Stockbrokers head of UK equities, Richard Hunter, cautioned the valuations were "punchy" for such a fledgling sector. While an imminent technology stock crash was unlikely, according to Mr Hunter, he said investors would do well to beware what could be finger-in-the-air valuations for firms with unproven earnings and little in the way of track record.

Lehman Brothers concedes its valuation of Confused.com is "demanding", yet the group argues the price is right.

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