Standard Life set to slash price range for flotation

Standard Life is expected to announce today a savage cut in the price range for its flotation next month after sharp falls in equity markets in recent weeks.

Institutional investors were being sounded out yesterday about buying the shares for as little as 200p to 210p compared with the indicative price range of 240p to 290p placed on the offering in April by Standard's advisers, UBS and Merrill Lynch.

The scaling back in the price will mean much smaller windfalls for its 2.4 million members, who had expected to receive an average of £1,700. Now that could be whittled back to £1,300.

A fresh estimate of the price at which Standard's shares will be sold will be included in the flotation prospectus published this morning.

No final decision was to be taken on that range until Sandy Crombie, Standard's chief executive, and his board met advisers late last night.

City experts widely expected Standard to revise its estimated price downwards, but most thought the insurer would be reluctant to value itself by even as much as 10 per cent less.

Today's update on the indicative price will only be another estimate of what the shares will fetch at flotation in July. The prospectus will also confirm that members and customers will be offered the chance to buy shares at a 5 per cent discount to their opening price at flotation.

Standard declined to comment on whether the price range would be cut. However, a spokesman said: "At all times, Standard Life's focus has been on maximising the value to be distributed to its members at the point of flotation."

Although several smaller companies have delayed stock market debuts in these unsettled markets, Standard seems determined to press ahead with what will be the biggest flotation in London for five years.

This month, the cinema chain Cineworld and the Scottish investment vehicle Braveheart were among those to put listings on ice. The nursing homes group Southern Cross, which had been planning a £550m listing next month, is also expected to confirm it has shelved its flotation plans for now because of the market turmoil.

Standard received formal permission to demutualise from the Court of Session in Edinburgh at the end of last week.

Sentiment towards insurance companies has been harder hit than the wider market in recent weeks. Aviva's merger approach for Prudential in March raised hopes for consolidation in the industry, as did Standard's admission that it had received a merger approach, widely believed to have come from Resolution. Since then, merger hopes have faded.