Tumbling stock markets knock 10% off Standard Life IPO price

Tumbling stock markets knock 10% off Standard Life IPO price

	Published : Sat, 17 Jun 2006 11:25 By : Richard Owen Print this Story

EDINBURGH: Insurer Standard Life has cut its IPO price range by 10 percent subsequent to the steep declines in equity markets in recent trading sessions, a spokesperson said yesterday. Besides reducing its market value on listing, the revision would also take away a similar portion from the windfalls to Standard Life members (policy holders).

The recent battering equities took in global markets had knocked off 9 percent off the FTSE 100 index. The insurance sector itself lost close to 15 percent of its stock value. The sharp downslide pressured Standard life to pare its initial public offering price range by 10 percent. Accordingly, Standard Life share price on listing would be between £2.10 and £2.70 (per share) reduced from the previous range of between £2.40 and £2.90.

At the new price, the insurer would still be among the UK’s biggest employers possessing a market value of between £4.35bn and £5.25bn.

The new price also means that its 2.4 million members would be receiving a 10 percent smaller windfall than if the company had stuck to its April price range. According to estimates, the average windfall that members can expect would be reduced from the earlier £1,700 to £1,540. Members expected to receive such windfalls a week after Standard Life gets listed on the London Stock Exchange on July 10.

Upon listing, members will receive 185 shares each and most will be entitled to additional shares depending on the value and duration of their policy. About 5 million people holding smaller policies and retail investors, though not entitled to windfalls, can also participate in the IPO and are offered a discount of 5 percent on the listed price. The revised price range offers an “excellent buying opportunity” to retail investors, the insurer said.

Despite the sharp dips in recent trading sessions, the insurer is positive about the response to the flotation. It expects a significant percentage of applications from institutional buyers as well as from retail investors. Some analysts feel the high volatility in the market might likely force the company to call off the IPO but the insurer believes that is not likely. Some even pointed out that the smaller price range would make it an easier target for a potential takeover. When the insurer had announced its demutualization plans in April, some suitors had approached it with bids.

Besides revising its IPO price, the insurer also announced a dividend payout for the period July to December 2006 amounting to £109 million representing half of the year’s total dividend. Which means: if Standard Life’s performance over the next six months matches guidance figures and forecasts, members would receive dividend at the rate of 10.8p per share for the full year or 5.4 for six months. Investors would also receive bonus shares at the rate of one for every 20 shares held for 12 months or more.