Halifax investors in line for pounds 1,700 windfall on pounds 13bn floa t

The windfall from the flotation of Halifax Building Society could be worth an average of more than pounds 1,700 for its 7.6 million members, it emerged yesterday. And according to analysts, Halifax could be valued at almost pounds 13bn when trading in the shares begins in early June.

The society said yesterday it would issue 2.51 billion shares, and it would have paid a dividend of 13.6p net out of earnings of 34.1p for the 11 months to the end of December if it had been a quoted company. If the shares are valued on the same pro forma price earnings and gross dividend ratios as the A&L, which floated last week, this would suggest a market price of 506p a share.

That in turn would value the minimum entitlement of 200 free shares at more than pounds 1,000 and the average holding at pounds 1,736. Eligible Halifax borrowers are entitled to 200 shares, investors with between pounds 100 and pounds 1,000 on their account will receive 200 shares, plus one extra share for every pounds 50 held on the lower of the balances held on the two qualifying dates in November 1995 and February 1997.

The Society also yesterday set a minimum price of 415p for the free shares it will auction on 30 May on behalf of any of its 7.6 million members who want their windfall in cash rather than shares. If offers from institutions fail to reach the minimum they will not be sold without a fresh instruction from members.

Gary Marsh, head of corporate affairs at Halifax, said: "We have set the minimum to reassure investors so that they know that we will not sell below this amount.

"In this way they do not have to worry about the possible adverse impact of the election and any subsequent rise in interest rates on the value of their windfall."

Andrew Faulds and Mike Blackburn, Halifax chairman and chief executive respectively, will be touring City institutions to persuade them to bid higher than the 415p minimum.

City sources suggested that the minimum price of 415p a share will be comfortably exceeded at flotation on Monday 2 June, giving far bigger cash payouts to those who want to sell on that day.

The Halifax transfer document last December estimated the likely share value to be between 390p and 450p, since when shares in the banking sector have risen by an average of 18 per cent.

Matthew Ponsonby, senior associate director at Deutsche Morgan Grenfell, which is helping to oversee the bookbuilding exercise, said he hoped the share price at flotation would be higher than the published floor, although he refused to speculate by how much.

Mr Marsh added that Halifax had considered a similar approach to Alliance & Leicester. A&L, which floated last week, said that it would halt the sale of its shares if stock markets plunged by 20 per cent or more.

Members who want to sell must complete and send back a form to Halifax if they want the society to sell their shares free of charge to institutional investors on 30 May, prior to the start of normal trading on the Monday.

Halifax executives are now hoping for an orderly run of sell orders rather than a potential last-minute rush close to the 26 May deadline, which executives admitted might overwhelm the administration.

If for any reason the shares fail to reach the 415p reserve at auction the building society will go back to members and ask if they still want to sell, or to hold on and wait for a higher price. In practice, the shares are expected to fetch substantially more.

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Syria civil war: Meet the military commander who says his soldiers will not rest until every inch of their war torn country is free of Islamist 'terrorists'

‘We won’t stop until Syria is back to normal’

Near the front lines with Islamist-controlled towns where Assad’s troops were besieged just last month, Robert Fisk meets a commander confidently preparing his soldiers for battle
The inside story of how Bill Clinton built a $2bn global foundation may undermine Hillary's chances

The inside story of how Bill Clinton built a $2bn global foundation...

... and how it may undermine Hillary's chances in 2016
12 best olive oils

Extra-virgin, cold-press, early-harvest, ultra-premium: 12 best olive oils

Choosing an olive oil is a surprising minefield. Save yourself the hassle with our handy guide
Rafa Benitez Real Madrid unveiling: New manager full of emotion at Bernabeu homecoming

Benitez full of emotion at Bernabeu homecoming

There were tears in the former Liverpool manager’s eyes as he was unveiled as Real Madrid coach. But the Spaniard knows he must make tough decisions if he is to succeed
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?