HECTIC trading is expected in Norwich Union's shares this morning following the substantial over subscription for the shares. The public offer price has been set at 290p sterling, or 265p to members after the 25p discount.

This is at the upper limit suggested by Norwich but bookmakers City Index has predicted that the shares could rise to as high as 353p by the end of the day. Some analysts said, on fundamentals, Norwich's shares should be valued at around 270p but the likely demand from institutions could push this up to 320p. Other analysts agreed and put the range at 320p to 330p.

There will be no bonanza for those who applied for large allocations. Those applying up to £1,690 will receive 100 per cent of what they wanted (that is on top of their free shares) but after that there is a sharp scaling down to 9 per cent for the maximum application for £112,500.

No separate figures are available for Irish investors other than the 62 million free shares that have been allocated to the 150,000 members in Ireland. Norwich Union's Irish policy holders had borrowed £500 million to buy extra shares and, with the sharp scaling down, only a small proportion of that facility will be taken up.

Mr Vincent Sheridan, group general manager of Norwich's Irish operations, said "the interest in the flotation and the response to the opportunity to subscribe for additional shares from our member in Ireland has been tremendous ... flotation will be to the benefit of policyholders and shareholders alike".

Many investors will not be able to immediately trade in the shares because they will not have their share certificates. Those who received the free shares only and who returned their members' application forms by June 5th should receive their certificates today so they should be able to trade.

Qualifying with profit members received a variable allocation of free shares, subject to a minimum of 300. These will have a value of around £1,000. Qualifying nonprofit members received a fixed allocation of 150 free shares. These will have a value of some £500 million.

However, others will not receive their certificates until after June 20th. Norwich Union has cautioned that those who sell before receiving a share certificate "do so at the risk of selling shares for which they have not received an allocation".

Overall, there has been a huge demand for the shares. The members offer was oversubscribed 3.9 times. The average application was around £6,000. Had Norwich Union not allocated an extra £400 million, the offer would have been oversubscribed 5.8 times. Despite this demand, 47 per cent of applications from policy holders will receive a full allocation. The members will control 77 per cent of Norwich Union's share capital.

There was an even greater institutional demand for the shares. Here the public offer was oversubscribed 10 times.

The total proceeds from the offerings amount to some £2.4 billion. Norwich Union has raised £1.75 billion, of which £1.5 billion will be injected into the life fund and some £660 million will fund cash payment to certain overseas members and pension trustees.

Norwich Union announced its flotation plans on October 2nd last year. The flotation, which has ended its 200 years as a mutual, values it at over £5.6 billion, making it Britain's third largest insurer, after Prudential Corp and Royal & Sun Alliance.

Norwich is reported to have been a takeover target, with Australian insurer AMP touted as the favourite to head the list of possible predators. However, the proposed price of the shares now makes Norwich a more expensive target.