NORWICH Union shares got off to a strong start in London, opening at 355p sterling before settling back to close at 325p, bringing substantial windfalls for its 150,000 Irish shareholders.
At yesterday's closing price of 325p, the minimum allocation of 50 free shares was worth around £487.50 sterling (£526), while those with 300 shares are in line for a windfall of £975 sterling, which translates into around £1,050 at the current exchange rate.
Many longstanding customers with large investment policies will have made even bigger profits from the flotation.
More than 146 million share transactions were put through in London yesterday, with dealers expecting increased activity over the next two weeks, when many of the smaller shareholders are expected to sell their shares.
And while many policyholders will be disappointed with the amount of extra shares they will receive at the specially discounted price of 265p, at 325p they still gained about 60p a share on any they managed to buy.
The insurer confirmed yesterday that Irish policyholders will be buying any extra shares at an exchange rate of 92p sterling while any money being refunded to disappointed policyholders will also be converted at this rate.
The shares, which were issued at 290p, traded at around 330p for most of the day against strong demand for the shares in the market.
In line with a weaker trend in London however, Norwich Union was eventually dragged lower, amid speculation that Britain's Chancellor of the Exchequer is preparing to introduce new measures which could affect investors, in his forthcoming budget.
Analysts believe that these concerns may dog the market until after the July 2nd budget, although they expect Norwich Union's share price to remain relatively strong.
Despite closing lower on the day, Norwich Union members who are getting free shares have still made substantial profits.
Norwich Union was forced to claw back the number of specially discounted shares that could be purchased by its shareholders because of the huge demand.
Its share offer, of £1.2 billion shares was more than four times over subscribed, with policyholders looking for the maximum allocation of £112,500, getting just over £10,000 worth of the extra shares. These shareholders can expect to receive a refund of any additional monies sent to the company by July 4th.
All policyholders who have subscribed for up to £1,690 worth of extra shares will get all of the shares they have applied for.
Stockbrokers in Dublin were kept fairly busy yesterday with investors looking to both buy and sell Norwich Union shares.
Irish shareholders will receive 62 million free shares as part of the flotation, which are valued at just over £200 million.
