The cash windfalls expected from the demutualisation of Standard Life were cut by 9 per cent yesterday, as poor equity markets forced the insurance company to slash the price range for its flotation on the London stock market. Laura Slattery reports.
The average sum members of the former mutual company are on course to receive is now expected to be €664-€1,319, up to €131 less than the €730-€1,450 average windfalls originally anticipated.
Standard Life, which has 94,000 eligible members in the Republic, reduced the range for its planned listing in July by about 10 per cent to 210-270 pence per share, valuing the company at up to £5.25 billion (€7.69 billion).
In April, the insurer announced a range of 240-290 pence per share, which valued the company at up to £5.5 billion.
Since then, turbulent stock markets have wiped around 9 per cent from the value of the FTSE 100 index of blue-chip shares, while the DJ Stoxx index of European insurance shares has dropped by more than 11 per cent.
The exact value of the windfalls members will receive will depend on the type of policy held, the size of the investment and the length of time they have held it, as well as the actual flotation share price, which will be announced on July 9th ahead of the planned listing on July 10th.
Policyholders can cash in their shares at the time of flotation or hold on to them to qualify for a share bonus scheme, under which they will receive one bonus share for every 20 shares still held a year after flotation.
Policyholders are also invited to subscribe for additional shares at discount prices under a preferential share scheme.
The discount will be 5 per cent on the offer price, Standard Life said yesterday as it published its prospectus and launched its share offers.
The flotation price range announced is still likely to propel Standard Life into the FTSE 100 as the fifth largest UK-listed life insurance company.
"We have real confidence this IPO [initial public offering] will be done within this range," chief executive Sandy Crombie said. "Standard Life has every prospect for an excellent, independent future."
The company said it expected to pay its first dividend of 5.4 pence per share on the second half of 2006 in May 2007.
The Edinburgh-based insurer, which aims to raise £1.1 billion of new capital through the flotation, dismissed suggestions that falling markets could force it to delay its stock market debut.
Some 98 per cent of members voted to abandon the company's mutual status at a special general meeting in Scotland on May 31st. - (Additional reporting Reuters)
