Caffe Nero, the coffee bar chain, is to float on the main London Stock Exchange after raising £9m through the placement of 18m shares at a price of 50p each. This gives the company a market capitalisation of £33.7m.

The money will be used to fund the group's expansion. It has 58 outlets across the UK and plans to open three to four per month with the aim of 100 sites trading by May 2002.

Gerry Ford, who runs the chain, delayed its planned £40m flotation in October last year blaming market volatility.

At the time bankers were claiming the price was too high "The company is worth nearer to £20m," one said.

Paladin Associates, the UK venture capital firm, is the lead investor in the chain. It has injected £4.9m of equity into Nero to develop the business, and Ford in return delivered a company with a £32m valuation before public funding. Original investors are expected to receive more than six times their money in three years, or a return of 56% per annum.