Standard Life shares in demand ahead of flotation

Standard Life's 94,000 Irish customers are expected to reap windfalls of €637-€1,266 when the insurer floats on the London Stock Exchange today.

A late surge in demand means some who subscribed for preferential shares will not get their full allocation, while about 20 per cent of the insurer's customers still haven't claimed their free shares.

The shares are to be offered at £2.30 (€3.50) each, giving Standard Life a market capitalisation of £4.65 billion (€6.75 billion). The initial public offer price is below the £2.40-£2.90 per share price range indicated by the company last June.

The company said on Friday that up to 140,000 Standard Life customers will be denied the full share allocation they sought in the demutualisation process because of a late surge in demand, with the offer to institutional investors being three times subscribed.

Some 2.4 million members across Europe qualify to receive a windfall. About 300,000 customers applied for shares worth £1.35 billion. Under the preferential offer they received a 5 per cent discount.

These applications were scaled back to €1.07 billion.

Customers who applied for up to £2,000 in shares under the preferential scheme will have their orders met in full, the insurer said. Above this level, applicants will receive 70 per cent of the additional shareholdings for which they applied. The maximum allocation is £50,000.

More than half of its qualifying members are expected to receive their full allocation.

Members, customers and employees will own about 75 per cent of the company.

The company estimates that about 20 per cent of those entitled to a cash bonanza will miss out becuase they did not claim their allocation in time.

Standard Life has made efforts to contact those customers and said that their unclaimed shares will be held in trust for 10 years. After this period they will be sold and the proceeds will be donated to charity.

The company has not disclosed how many of the 94,000 Irish customers may be in this group.

Institutional investors will receive on average only about a third of the shares they applied for. Customers will own 75 per cent of the shares when trading starts.

The flotation will make Standard Life the fifth-largest UK listed life assurer. It will join the FTSE 100 in September.

Dealings in the shares are expected to commence on the London Stock Exchange at 8am. The flotation will end 80 years of mutual ownership for the Edinburgh-based life office.

Its chairman, Sir Brian Stewart, said the flotation would start an important new chapter in its history. "It is our task to make the most of the opportunities that lie ahead of us," he said.