Halifax float nears completion as trading set to start in June

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Halifax Building Society yesterday moved into the final furlong of its lengthy flotation process as it announced that trading in its shares will begin on Monday 2 June.

More than 8 million individual members of the society will receive letters over the next two weeks telling them how many free shares they stand to receive, with those eligible in line for a minimum of 200 shares worth an estimated pounds 900.

Members will be sent detailed instructions outlining how they should claim their shares and the choices they have for keeping or selling them.

Mike Blackburn, the society's chief executive, urged prospective shareholders to fill in the forms needed to claim their shares and send them back: "We cannot allocate free shares to any member until we receive their claim form confirming that they are entitled to [them]."

Analysts yesterday suggested that in the wake of the surge in the price of Alliance & Leicester shares on Monday, well above estimates a few months ago, Halifax shares could easily rise above earlier predictions.

The extent to which this might happen would depend on the availability of shares at flotation, with low numbers of sellers potentially forcing prices up.

Kathryn Newton, banking analyst at UBS, the Swiss banking group, said: "The value of Halifax shares will depend a lot on the auction process. If there were fewer 'carpetbaggers' [more likely to sell quickly], that could put prices up."

But she added that Halifax shares might equally trade far closer to their fundamental value, depending on the number of people indicating that they wish to offload their free entitlement immediately.

Unlike A&L's flotation, Merrill Lynch and Cazenove, joint brokers for Halifax, will set a public price below which no share will be sold.

The mechanism for selling the shares will differ from A&L's three-stage auction. The bookbuilding process will take place once, on the Friday prior to flotation, and once a day thereafter for as long as necessary.

Next week, Halifax aims to publish the minimum price it expects its shares to be sold at. Earlier estimates by the society have ranged from 390p to 450p.

In the run-up to conversion, the society will invite institutional investors to make bids for parcels of shares. The prices then paid to members will represent the weighted average of the price bid by the institutions.

A spokeswoman said: "We believe that selling shares in this way ensures all members are treated fairly and equally and receive the best price available at the time their shares are sold."

Halifax said yesterday it would attempt to obtain at least the minimum price, which it will publish on Monday, on behalf of a member selling his or her shares. If that amount is not available on conversion, the shares will not be sold.

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