MANY Norwich Union policyholders are likely to get only a fraction of the specially discounted shares for which they have bid, because of the phenomenal demand for them.

Brokers have warned that, while the company will have to work hard to try to please all of its members, many particularly those subscribing for the maximum allocation of £112,500 - will get only a small proportion of the shares requested. Members and group employees are entitled to apply for shares in addition to the 231 million free shares that have been allocated to them.

"I'd be amazed if anyone got £112,500 worth of shares, if the interest that is currently being shown actually translates into orders," according to one broker. Policyholders applying for the smallest allocation of shares, however, are expected to get the full amount sought.

Given the huge interest in the forthcoming flotation, brokers are now suggesting that the members' offer will be heavily oversubscribed. The 150,000 Irish members alone could soak up this allocation quite easily, they say.

Norwich Union has pledged that at least £800 million worth of shares will be reserved to meet share applications from members. It has also indicated that it could claw back a further £400 million of the shares being offered to general investors to meet particularly strong demand from members. Even at that, however, most brokers suggest many members will be disappointed.

Against such strong demand, members are being urged to be cautious, and to consider the fact they are likely to get only a fraction of the shares they expect.

As with most flotations, the allocation is expected to be biased in favour of those members seeking the smallest number of additional shares. Some analysts have suggested that Norwich Union could, for instance, decide that everyone applying for anything up to around £5,000 worth of shares would get them.

Beyond this level, it is likely members will receive a percentage, possibly 10 per cent, of the shares for which they have applied.

Those taking out substantial loans to buy additional shares should weigh up whether they can still make money based on the gains they may make on a smaller number of shares.

Most people borrowing funds from banks, building societies and credit unions are likely to be paying a rate of interest of around 10.5 per cent on their loans. In addition, most are also being asked to pay a special arrangement fee to the financial institution for the loan, which are reportedly running at anything from £200 to £600, and commission on any shares sold.

Under the members offer, Norwich Union is offering to give shares to members at a discount of 25p to the price paid by institutions and ordinary investors as part of its efforts to raise about £1.75 billion on the London stock market. A guide price for the shares has been set at between 240p and 290p but the actual price that members will have to pay won't be known until June 15th.

Policyholders subscribing for these shares must return their applications by 2 p.m. on Tuesday.