STOCKBROKERS in Dublin are gearing up for a hectic few weeks. Norwich Union's 150,000 Irish policyholders are to receive shares in the group, which is floating on the London stock market on Monday. An unprecedented level of business for brokers is expected, as the public try to sell their shares, or just seek advice.
The level of interest from Irish policyholders has been astonishing. As well as getting free shares, members have been able to apply for extra shares.
The company says it does not know how many have done so, but market sources believe more than 100,000 of the members may have applied for additional shares, with some estimates running as high as 130,000.
Norwich Union's Irish members have probably bid for more than £1 billion of shares. They have borrowed more than £500 million and the same amount has probably been withdrawn from savings. However, the group is only offering £1.2 billion to all its shareholders in Britain, Ireland and elsewhere. So Irish members applying for extra shares will get much less than they are looking for.
Those applying for just £1,000 or so may get most or all of the shares they apply for, but those applying for the maximum amount of £112,500 will only get a fraction of what they are looking for.
Many people have borrowed sums of £100,000 in the hope that a quick sale on the shares they get will more than compensate for the interest on the loan.
Norwich's policyholders do not yet know the value of the free shares they are being offered. On Sunday the insurance group will announce the price at which the shares are being floated. It will also reveal the number of shares being given to members who have applied for extra shares, which are being made available at 25p sterling below the flotation price.
It has indicated that the flotation share price will probably - though not necessarily - be between 240p and 290p. A figure around 290p is likely, given the demand for the shares. This would value the basic allocation of 150 Tree shares at £435; people who have with profits policies will receive more shares.
However, the real value of the shares will be determined by what people are willing to pay for them. The shares will start trading on the market on Monday and are expected to rise in early trading. Yesterday advance "betting" in London was that the shares would rise to about 346p. This would put a value of £519 on the 150 shares. However, investors should realise that there is never any guarantee on the share price.
Anyone who is just taking the group's offer of free shares, and not applying for any extra shares, should have notification by next Monday that they have received their shares, either in the form of a share certificate or an official notification, for those who opted to have their shares in the company's share account. They cap thus decide to sell their shares immediately.
Those who have applied for extra shares will get the certificates or official notification early on the week of June 23rd - they will be posted on Friday 20th.
Members have the choice of receiving either share certificates or having shares held in a special Norwich Union Share Account: If they did not specify otherwise, the shares will have gone into the share account.
This share account service is being operated through Davy Stockbrokers. Davys is offering a postal service, whereby members can send instructions to its dealers to sell their shares and is recommending this as the cheapest and most efficient option.
Davys is charging a special low rate commission for selling the shares, which starts at a flat rate of £7.50 on any deals worth up to £7,500. These rates will apply only until the end of August. While no firm figures are available yet, brokers are estimating that more than a third of Norwich Union's Irish policyholders will have opted to have their shares held in the designated share account.
Members receiving share certificates are free to shop around and sell their shares through any of the main stockbrokers or through any AIB branch.
Those who have applied for extra shares may be able to sell them in the first week, before they receive their certificates. However, brokers warn that this could be dangerous; if there is any error on the application form, then Norwich will reject the application for extra shares. If a shareholder enters into a contract to sell and subsequently have not got the shares expected, they will be obliged to buy the shares in the market to fulfill the sell contract.
AIB is offering a deal through its stockbroking division, Goodbodys, to sell the shares at the same reduced commission rate as Davys.
Many of the other stockbrokers are also offering special rates to Norwich Union members, with the smaller ones tending to be more competitive, with rates varying from between £7.50 to around £40.
One Dublin brokerage, BCP, is offering a live dealing service, with price quoted on its Internet website, where customers can view the prices available for their shares in London.