First National Building Society will be floated on the Dublin and London stock markets in early October. Group managing director, Mr John Smyth, said while it will continue to watch developments in the volatile stock markets, the flotation is expected to proceed as planned.
"We are watching the markets with interest and will take account of all conditions. This is still a good environment. We are taking a very positive view at the moment and expect October to be the flotation date" he said yesterday.
Mr Smyth added that despite the current nervousness, the markets are still well ahead of where they were when the society first announced plans to change its status last September.
"We don't know how things will go. The market reached a high in April and it is now 10 per cent off that but is still well in excess of its position when we announced our flotation plans."
The flotation will yield a windfall for members of the society. Around 220,000 members will qualify for free shares while a further 100,000 members will receive a small cash payment. Qualifying members will get 450 free shares each which First National has estimated will be worth around £1,170, but the actual value will depend on prevailing market conditions at the time of flotation. The society will be sending claim forms to qualifying members next month, together with application forms for those who wish to buy additional shares at the initial offer price.
First National will also be seeking to raise additional funds through the flotation. When the flotation was first announced the society indicated it would be looking to raise £150 million from members subscribing for its shares and institutional investors. This has now been scaled back to £100 million. Deputy group managing director, Mr Tony Shanahan, said it has decided that £100 million "will do fine".
Despite uncertainty in the markets, he expects the society's members will nonetheless have a strong appetite for the shares, while institutional interest has also been very encouraging. "Even if our members didn't want to take our equity the institutions will." Anecdotal evidence coming from its branch network suggests a high level of interest in the shares among the society's members, he added.
Mr Smyth said its objective is to place the stock as widely as possible and is unconcerned about other financial institutions building up a stake in the publicly quoted company. The society will convert to a publicly quoted company next month, and will then trade as First Active. Mr Smyth predicted strong interest in its shares, based on the prospects for growth in both the Irish and UK markets.
The society could have a value of between £250 million and £390 million when it comes to the market depending on the strength of Irish and British markets at the time of flotation. Its brokers have estimated the shares could be worth £2.60 each at flotation although the issue price will not be determined until closer to the flotation date. Some 99 million shares are to be issued, the majority of which will go to its members in free shares.
