STANDARD LIFE IS EXPECTED to cut its flotation price range, diminishing the value of windfalls for policyholders, reports The Daily Telegraph .
According to the paper, the mutual insurer had given an indicative range of 240p-290p a share for its planned float next month. However, tumbling stock markets worldwide have spooked investors and it is likely Standard Life will have to lower its price expectations by as much as 10%.
Members have been promised windfalls consisting of a fixed allocation of 185 shares plus further shares dependent on the policies they hold. At the mid-point of the existing range, 265p, policyholders would receive a minimum payout of £490. However, if the share price range is lowered to around 220p-260p, with a mid-point of 240p a share, policyholders would receive £444.
Chief executive Sandy Crombie is said to be determined to press ahead with the listing, due to be London's biggest initial public offering so far this year. However, a Telegraph source alleges the range could be "slightly down" on the previously mooted price, "because of market pressures".
Interest from institutional investors is still expected to be strong as investors buy into recent takeover speculation. There have been rumours of consolidation in the life insurance sector since Norwich Union owner Aviva made an unsuccessful approach for rival Prudential in March. Standard Life also revealed it had received more than one approach, including one believed to have come from closed life fund specialist Resolution.
Standard Life will publish its flotation prospectus on Thursday and is expected to reveal members and customers will be offered a 5% discount on buying additional shares.
In a proposal to members and policyholders ahead of the vote, Standard Life said its advisers, Merrill Lynch and UBS, had estimated if the shares were listed, they would have traded within the range of 240p and 290p on April 13. Standard Life warned "the offer price… will not necessarily be within this range and could be materially outside it".
FINANCE MINISTERS FROM the G8 economic powers have predicted a year of strong economic growth, despite high oil prices, skidding US stock prices, rising interest rates and fears of inflation, says The Scotsman.
Meeting in St Petersburg in Russia, the ministers said in a communiqué that economic growth was healthy and becoming more broadly based despite oil at $70 a barrel and imbalances - one of which is the big US trade deficit, another China's trade surplus.
The G8 meeting, to prepare for a summit next month, called for progress in the stalled Doha Round of trade liberalisation talks but the words rang hollow as countries such as Brazil said they could fail if developed countries did not give more ground. The world economy is forecast by the International Monetary Fund to grow 4.9% this year, the best since 1976 apart from an exceptionally strong 2004.
BT’S CAMPAIGN TO FORCE the government to underwrite £28bn of its pension liabilities has suffered a significant setback after it emerged the Thatcher government failed to get clearance from Brussels for the guarantee, reports The Times.
The DTI’s failure to clear with the European Commission its controversial decision to offer BT a “crown guarantee” for its pension fund means the guarantee could be stripped from the telecoms giant if it is found to constitute state aid.
The Commission is examining a complaint from an anonymous rival which suggests the decision by the government to underwrite BT’s pension scheme constitutes state aid. If the Commission rules the complaint has substance, there could be a formal investigation into the guarantee.
BT, which insists that the guarantee covers three quarters of its £38bn pension fund liabilities in the event it goes bust, could also be forced to pay back, with interest, any financial benefit it has gained since the pledge was conferred. Under
Article 88 of the European Commission Treaty, member states are obliged to inform the Commission of any plans to grant or alter aid and must not put into effect any measures until the Commission has reached a decision. But the permission was not sought.
Lawyers in the UK have said they believe the guarantee, the existence of which came to light only recently, although it was conferred by the government in 1984, bears “many of the hallmarks” of state aid. They maintain the pledge could have given BT financial advantages, such as a better credit rating or better terms on loans, than rivals which do have not such a guarantee.
But BT maintains the pension guarantee could not constitute state aid because the guarantee applies only to employees who joined the pension scheme before privatisation.
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