Woolwich windfall up to pounds 1,600

Woolwich members are in line to receive share windfalls with an average value of pounds 1,600 when the building society floats in July, a much bigger handout than they had previously expected. Estimates of the value of the next share bonanza emerged as Woolwich started writing to its 2.5 million members yesterday with details of their allocations.

Analysts said yesterday the recent rise in the value of bank shares meant the average allocation of 658 shares per member would be worth more than pounds 1,600 at a probable flotation price of 250p. The minimum allocation of 450 shares would be worth pounds 1,125 at that price.

In January, Woolwich said it expected a range of 175p to 200p, putting a price tag of just over pounds 3bn on the society. The latest calculations mean Woolwich will be worth more than pounds 4bn when it joins the stock market.

Issuing its listing particulars, Woolwich said it expected to make pre- tax profits of pounds 210m in the six months to June, before a pounds 26m charge to cover the cost of its stock market flotation. Admitting to being overcapitalised, the society also hinted at a share buyback, promising to "consider ways to return capital to shareholders".

As with the Alliance & Leicester and Halifax flotations, members who do not want to hold on to their shares will be able to sell them through a series of four auctions to institutions. Unlike the other floats, however, the auctions will not take place until after first dealings on 7 July in order to maximise the price raised for members.

Commenting on its short-term trading outlook, Woolwich was upbeat about prospects for future growth in its lending, investing and insurance businesses. It was also optimistic about the outlook for the UK housing market, predicting house prices would grow by 6 per cent in 1997.

The latest information from Woolwich coincided with yet another increase in the price at which Halifax shares are expected to close on the first day of dealings next Monday. Clients of the spread betting specialist, IG Index, were yesterday placing bets that implied a price for the shares of between 740p and 750p.

Halifax's original estimate was that its shares would start trading at between 395p and 450p. At the latest forecast, members stand to pocket an average windfall of almost pounds 2,500.