Friends Provident set for lower pricing

Friends Provident, the mutual life assurer which is preparing for one of the largest flotations in the UK this year, is expected to price its shares at the lower end of expectations.

The society, which will start trading on Monday, has been priced by its advisers Merrill Lynch at a range of 210p-270p. This values the new company at £3.79bn at the mid-value.

Following a fall in the "grey" price at the spread-betting firm Cantor Index, the actual price is now expected to be at the bottom of the range when it is announced on Friday.

Cantor's price has tightened to 245p-252p a share, compared with 258p-264p a week ago and 273p-280p when it started tracking Friends Provident on 11 June.

David Buik, marketing manager of Cantor, said: "This is one of the few initial public offerings this year which have been big enough to get your teeth into. But Keith Satchell [Friends Provident's chief executive] has been brutally honest and warned that sales would be down this year."

There is also a general lack of love for insurers in the City following the high-profile failures of Independent Insurance and Equitable Life and the launch of a batch of potentially damaging investigations into the sector.

Friends Provident's 1.7 million policyholders, who will receive an allocation of at least 200 shares each, have to register their decision to sell or keep the stock by today.

The institutional offer closes on Friday and 10 per cent of the new shares have already been allotted to the European financial services companies Eureko and a consortium including Banco Comercial Portugues.