According to newspaper reports Mondi, which owns 50% of UK-based Aylesford Newsprint, has an estimated value of between 3bn and 4.5bn and will go straight into the FTSE 100.

It is believed that its current owner Anglo American (AA) will retain a 70-75% stake following the IPO, which is expected to happen within the next 12 months.

"Mondi is a very good business, highly cash generative, and it has some very attractive growth opportunities, which we intend to pursue," said AA chief executive Tony Trahar.

The decision to list Mondi, which includes Mondi packaging and Mondi business paper (previously Neusiedler), follows AA's announcement in October that it had completed its strategic review.

Trahar declined to rule out the possibility of finding a trade buyer for Mondi, but said: "We think the right way to go is prepare for a listing on the LSE."

As well as Kent-based Aylesford, Mondi includes nine pulp and paper mills and 105 packaging production plants in Europe, the US, Russia, Asia and Africa. In 2004 it recorded a group turnover of 4bn and 319m operating profit.