British software developer Orchestream Holdings yesterday defied negative investor sentiment towards internet companies by showing a 74% price jump on its stock market debut.

The stock reached a high of 322p shortly after listing, capitalising the group at £372m. Shares in Orchestream ended at 313.5p, compared with its issue price of 185p.

The surge in share price reflected strong demand for the stock, which saw its public offer nine times oversubscribed. The success of Orchestream ranks alongside that of fibre-optics maker Bookham Technology, which listed in April.

Both stocks have proved that wary investors are more willing to a pay a high price for shares in "infrastructure" style stocks that support the internet, telecommunications and personal computer markets rather than investing in e-commerce companies.

Orchestream has developed a piece of software that is designed to ensure the reliable transmission of data along computer companies' networks and the internet, using the basic internet protocol (IP) technology that allows computers to communicate with each other over the net.

Orchestream's software also allows the prioritising of data over the internet. The explosion in traffic has meant that IP transmissions have become errati c and slow, giving the software an edge over rivals.

Orchestream raised £49m through the issue of shares to institutions, which will own 37% of the company. Those funds will be used to expand the company's research and development and sales and marketing teams. Acquisitions and strategic alliances might also be considered.

Ashley Ward, Orchestream's chief executive, said: "It's important that we begin to widen the gap between us and any competitor that might emerge in this market."

He believes Orchestream has a 12-month lead on its competitors.

The competitive threat to Orchestream is expected to emerge from industry heavyweights such as Cisco, Lucent and Nortel. They are expected to develop their own software and could then use their marketing muscle to ease the likes of Orchestream to one side. Mr Ward said he was "pleasantly surprised" at the company's strong listing.

Orchestream had incurred a loss of £2.6m at April 30, on revenues of £411,000.

Analysts expect its losses to leap to £10m on sales of £2.7m this year and turn to profit in 2002.

The remainder of the company's share register will be split between management, owning 21% of the stock, chip maker Intel and Reuters holding 6%, and venture capital firms such as Atlas, Quester and Celtic House.

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