Nrma Pool For Institutions Is About 20pc

Sydney Morning Herald

Thursday July 20, 2000

By ANTHONY HUGHES

Early member response to the NRMA Insurance float suggests that institutional investors will get a chance to buy about 20 per cent, or about $800 million worth, of shares before next month's listing.

While about 27 per cent of the small number of members who have returned their forms so far want to cash in their shares, this level is not expected to be reflected across the 1.9 million membership because only about half are expected to return the forms.

In a similar situation to the demutualisation vote, when only 55 per cent of members lodged proxies, NRMA is again faced with poor member participation in the float process.

The association has promised to tip shares equal to 8 per cent of NRMA Insurance Group's issued capital into the share facility and book-build, assuring institutional investors there will be some available but probably not enough to satisfy demand.

Including these shares and taking into account the early response and the likely level of participation, about 20 per cent of shares in total or $800 million worth at the top price will be available.

Under the terms of the prospectus, if members do not return their forms they will be deemed to be wanting to hold their shares. The prospectus forms give members the option of cashing in their shares, buying more or doing nothing.

It is understood about 10 per cent of members have returned their forms, ahead of a July 28 deadline. NRMA plans to list on August 8. There is no public allocation of shares.

The price at which members will be able to cash in will be determined by bidding by institutions for shares within an indicative range of $2.25 to $2.75. Despite some suggestions NRMA shares are worth $3, this valuation range will not change.

Led by chief executive Mr Eric Dodd, NRMA executives are conducting a series of lunches and one-on-one presentations with institutional investors and are now into the Asia leg of the roadshow before heading to Europe.

This week's move to lift profit forecasts by 50 per cent for the year to June, 2000 has not affected most valuations on the shares, because most investors will value the shares based on future, not historical earnings.

In one of the few reports issued by a broker not aligned with the NRMA float, Ord Minnett is understood to have labelled NRMA a buy up to $2.40.

At $2.40, NRMA was attractively priced.

Attractiveness deteriorated at $2.75 at which point Ords held a neutral recommendation.

© 2000 Sydney Morning Herald

Back to News Index | Back to Home