Sellers lose out as Alliance shares climb

The 640,000 investors who chose to sell their shares in Alliance & Leicester last week lost out yesterday, with the price climbing to 571.5p at one stage during the company's debut on the stock market. Some 27 per cent of the 2.3 million people who received free shares decided to sell through an auction conducted by Cazenove.

The shares in the reconstituted bank eventually closed at 566.5p yesterday, valuing the 250 free shares received by all of the former building society's members at pounds 1,416.

The closing price values the new bank at pounds 3.3bn. The pounds 1,416 windfall for the 1.5 million investors who have retained their stakes is considerably more than the pounds 1,000 forecast by the bank's advisers last October.

The result of the first of three auctions held among institutions, which was held on Friday, was published yesterday. The average price achieved was 522p, the highest was 546p and the lowest 517p. There were 36 bids for a total of 52 million shares. The second auction was held last night, and the final round of bidding will be held late this afternoon.

Dealings opened yesterday at 545p, well above the middle price of 521p forecast by the City bookmakers, IG Index, at the close of business last Friday. A&L shares were easily the most active stock traded and by the close of business an estimated 70 million shares had been traded, including the 52 million sold by auction to institutions last Friday night.

Those who voted to sell their shares through stockbrokers Cazenove will have to wait until the start of trading on Wednesday morning before they know how much they will receive for their shares. They will get the average of the prices realised at the three auctions. The average price of last night's auction will be made known this morning.

The relatively low turnover yesterday excluding the shares auctioned last Friday suggests that the institutions were prepared to wait and see whether the shares could be bought cheaper But if prices start higher again this morning, some dealers said it it could trigger a surge in demand from institutions who will eventually need to hold up to half the total issue after it becomes a constituent of the FTSE 100 share index.

The surge in the share price yesterday took most of the City institutions by surprise and opinion is now divided whether it is sustainable. Last night's price values the shares at 13.9 times historic earnings and implies a yield of 3.6 per cent gross on the notional dividend the directors would have paid for last year. On the same basis its nearest rival, Abbey National, is trading at 14.4 times earnings and yields 4 per cent gross..

But John Leonard, banking analyst at Salomon brothers claimed the proper price based on fundamentals should be 480p-500p and the market price implied a strong expectation of a bid for the new bank or an early move to return surplus capital to shareholders.

If the market price is maintained it may have widespread implications for the value of shares in the Halifax, Woolwich and Northern Rock building societies and for Norwich Union, all of which are converting to public companies in the next three months. If larger numbers of shareholders now decide to hold on to their shares in these conversions in anticipation of a bigger profit by waiting, it could force institutions to bid prices up to secure the shares they need to comply with their investment rules.

Market report, page 23

Suggested Topics
News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
PROMOTED VIDEO
News
news

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'
film

Actors star in Woody Allen's 'Magic in the Moonlight'

News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Jack Huston is the new Ben-Hur
film

It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959

News
news

Watch this commuter wage a one-man war against the Circle Line
News
ebooksAn unforgettable anthology of contemporary reportage
Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's starring part
Travel
travel

...and the perfect time to visit them

Sport
Jonas Gutierrez (r) competes with Yaya Toure (l)
football

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week