Nrma Likely To Be Priced At $2.75; Modest Gain Tipped

Sydney Morning Herald

Saturday August 5, 2000

Anthony Hughes

Shares in NRMA Insurance Group will be priced at the top of the indicative price range $2.75 a share ahead of Tuesday's long-awaited listing, but shareholders can expect only modest day one gains.

The 480,000 members who subscribed for an additional $500 worth of shares will get their full entitlement, amounting to an extra 180 shares each on top of their member allocation.

The 320,000 members or 16 per cent who decided to sell into the share facility before the historic listing will receive $2.75 a share or almost $2,000 for the average member.

More than 1.6 million members or 80 per cent returned their forms. Those who didn't will be deemed to be holding their allocated shares.

The float's pricing team, including chief executive Mr Eric Dodd and representatives from joint global co-ordinators UBS Warburg, Credit Suisse First Boston and Macquarie Bank, met at 6.30 last night at Warburg's Governor Phillip Tower office to agree on the price. Chairman Mr Nick Whitlam and chief financial officer Mr George Venardos also were scheduled to attend the meeting.

The team will confirm pricing and allocations this morning ahead of tomorrow's disclosure of the details. But barring an overnight meltdown on Wall Street, the opening price is expected to be $2.75, which would give the company a sharemarket valuation of $4.07 billion, ranking it in the top 30 companies listed on the Australian Stock Exchange.

Institutional bids closed at 5pm yesterday with orders at the top end of the range for five times the 290 million shares available (including 20 million in over-allocations). Assuming all members who are buying more get their shares, only about 210 million shares, or 14 per cent of NRMA's issued capital, will be available for institutions. This shortage may help support the price.

The float's advisers are also expected to take another 30 million shares in order to operate a so-called ``greenshoe", a device designed to stabilise the market during the first weeks of listing. But despite the apparent high level of demand, expectations for a big profit on listing have been lowered.

Sources said the main reason was because institutional orders were over-inflated as was normally the case in such processes.

Also, NRMA will not be index-weighted until October, reducing the pressure on fund managers to build index weightings.

``It's a bit of a guessing act but assuming markets hold up reasonably, it will come on modestly above $2.75," one well-placed source said. ``While there was heavy demand at $2.75 a lot of that is sentiment driven rather than fundamentally driven, though it may go as high as $3 in the first week."

© 2000 Sydney Morning Herald

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