NCC, the UK market leader in insuring companies against the collapse of their business software supplier, plans to float up to 75 per cent of its shares on Aim next month in a placing expected to value it at about £65m. NCC, whose revenues have grown at 20 per cent a year over the last three years, is best known for its software escrow agreements, which hold the source code to business-critical software applications on behalf of software users.

It is the largest and fastest-growing part of the business, providing the service to more than 9,000 users, including 88 FTSE 100 companies.

Traditionally, software vendors withhold the software source code, as access to it could enable the creation of competing products.

The source code is essential in rectifying problems arising with software.

However, concerns about the collapse of small software vendors have led to the growth of software escrow agreements, under which vendors arrange to send a copy of the source code to an independent third party, such as NCC.

Rob Cotton, NCC’s chief executive, said that 1,800 software businesses have disappeared during the past 18 months.

He added “We hold the source code on behalf of the licensee so that if anything goes wrong, the code is released and the user can continue operating normally.”

Last year NCC released a software source code on 25 occasions.

NCC is a 1999 spin-off from the National Computing Centre. In 2003, it was bought by Barclays Private Equity, and the bulk of the Aim flotation proceeds will be used to buy back Barclays stake and repay debt.

The Manchester-based company also achieved a sharp jump in profits for the year to the end of May.

Operating profits, before exceptional items and goodwill-amortisation, rose 45 per cent, to £4.8m, on turnover up 23 per cent to £14.5m.

Operating margins rose from 28 to 33 per cent. NCC’s operating profits have risen from £1.3m to £4.8m over the past three years.

The company believes that it can at least maintain its current operating margins and its recent 20 per cent a year revenue growth.

More than £5.5m of the budgeted 2005 revenue for the escrow business is recurring from the automatic renewal of annual agreements.

Dresdner Kleinwort Wasserstein is the broker and underwriter, and joint financial adviser with Rickitt Mitchell, a Manchester corporate advice boutique whose managing director, Paul Mitchell, is NCC’s chairman.