Nrma Shares May Rise

Sydney Morning Herald

Wednesday April 19, 2000

By ANTHONY HUGHES

Stockbrokers expect the value of NRMA shares to rise after they list in July should members vote today for the demutualisation of the insurance arm.

The sharemarket hijinks of recent days are unlikely to directly affect NRMA members' shares, because NRMA Insurance is not slated to list on the Australian Stock Exchange until July.

As well, financial services companies have proved more resilient than other types of shares during the latest sharemarket rout, because they have not risen as much in the past year as technology shares.

Barring any unforeseen counting problems overnight, the NRMA will this morning disclose the proxy vote.

While the vote requires a high threshold of 75 per cent of voting members to approve the plan, there was some confidence yesterday that the proposal would be approved.

Most major stockbroking firms have released reports valuing NRMA shares above the independent valuation contained in the information memorandum.

Warburg insurance analyst Mr Frank Costigan estimated NRMA to be worth $3.42 a share, well ahead of Ernst & Young Corporate Finance's valuation of $2.60 to $3 a share contained in the memorandum.

ABN AMRO's insurance analyst Mr Nick Caley last week valued NRMA at $3.06 a share, saying the listing was well-timed as it would coincide with an improvement in insurance premiums and allow NRMA to leverage off its strong brand to grow locally and internationally.

``As a listed company, there's more incentive to run with a leaner capital structure, which will mean less surplus capital invested in capital markets," one broking analyst said yesterday.

Like the AMP listing in 1998, the need for professional investors to buy NRMA shares is expected to push up the prices in the early days of listing.

The lack of professional investors' presence on the NRMA share registry may be even more pronounced than at the time of the AMP listing, when the shares ran much higher than expected but later fell heavily.

The NRMA listing could also substantially broaden the level of share ownership with an estimated one quarter to one half of the 2 million NRMA members being first-time shareholders.

© 2000 Sydney Morning Herald

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