STRONG demand from Norwich Union policyholders has led to the making a further £400 million worth of shares available as part of next week's stockmarket flotation.
The insurance group, whose shares will begin trading on the London Stock Market next Monday, said yesterday that it was increasing its share offer to its 2.9 million members, from £800 million to £1.2 billion, in response to strong demand for the shares. The extra shares have been clawed back from the amount originally reserved for institutions and other public investors.
Many policyholders are still likely to be disappointed with the number of shares they will get, particularly those who have subscribed for the maximum share allocation of £112,500.
Because of the phenomenal demand, even with more shares available most members are expected to still get just a fraction the amount they subscribed for.
Norwich Union shares will begin trading on the London Stock Market next Monday. The company will announce the price at which they will be issued and the basis on which the shares will be allocated to its members on Sunday.
The insurer's 150,000 Irish policy holders are being given free shares and the opportunity to buy extra shares at a discount of 25p sterling. These additional shares are expected to be allocated at a price of between 215p and 265p. Norwich says that the shares will probably be floated at between 240p and 290p and the strong demand is likely to see the flotation at around 290p which would mean a price of 265p per share for members.
Most analysts are forecasting that the share price will rise in early trading.
Members could opt to get either share certificates, or to have their shares issued through a special Norwich Union Share Account. Those in line for free shares who are not buying any further shares, are due to be issued their share allocation from today and should receive them early next week.
Policyholders waiting to get extra shares, however, will not receive them for more than a week after the flotation. Norwich Union has said that it will issue these shares on Friday June 20th, so Irish members are unlikely to get them before June 23rd.
Policyholders waiting for share certificates won't be able to sell their shares until they receive their certificates. However any members who already have a relationship with a stockbroker may be able to negotiate a position in advance.
Members should be cautious however about trying to sell their shares before they have formal confirmation of their allocation due to possible application errors.
