THE 150,000 Irish policyholders in Norwich Union will record substantial gains when their shares are floated on the London Stock Exchange this morning.
They have already received 62 million free shares, which will be valued at over £200 million sterling. They have also applied for an unquantified number of other shares which they received at a discount.
However, those applying for large blocks of shares will he disappointed as their applications have been scaled down considerably due to the unprecedented demand. A total of 766,000 applications were received from policyholders, with a value of £4.65 billion, but only £1.2 billion was available. It was oversubscribed 3.98 times.
The applications from institutional shareholders were oversubscribed to times.
Policyholders who had applied for up to £1,690 worth of shares will receive their application in full. But after that the applications are scaled down to 9 per cent for those who applied for the maximum of £112,500.
This will disappoint those who had borrowed heavily to subscribe for the maximum amount. They borrowed more than £500 million from the Irish banks to buy the group's shares ahead of the flotation. Many had raised loans of £100,000, but only a fraction of these facilities will now be used.
To meet the extra demand in Ireland and in Britain, Norwich made a further £400 million worth of shares available as part of the flotation package. The extra shares were clawed back from the amount originally reserved for institutions.
Norwich yesterday set the pub offer price at 290p per share, or at the top of its range.
Policyholders who subscribed will pay 265p after the 25p discount. They are set to show substantial gains when the shares are quoted this morning, with the estimates of the share price ranging from 330p to 353p.
With profit members have already received a minimum of 300 free shares, which should have a value of around £1,000 this morning, while nonprofit members received 150 free shares, worth half that amount.