Standard Life to float for £4.65bn after price set at 230p

The Scottish insurer Standard Life finally pushed the button yesterday on the UK's largest flotation for more than five years, revealing it will issue shares at 230p when it begins trading on Monday morning - near the bottom end of the 210p-to-270p range it set last month.

The price will give the company a market value of £4.65bn, making it about the 50th largest quoted company in the UK. The business will enter the FTSE 100 at the next review in September.

At the float price of 230p, the average windfall payout for the 2.4 million members who were handed free shares will be about £1,475. This comprises 185 shares, worth £425.50, allocated to every qualifying customer, as well as an additional allocation dependent on the size of policy, and the length of time served as a customer with the company.

Revealing the results of its tender offer yesterday, the company said it had received a strong response from policyholders, with some 300,000 customers and employees taking up their right to buy additional stock at a 5 per cent discount.

It said all customers who had applied for up to £2,000 of additional shares would have their request met, with 56 per cent of all members having their allocations met in full. The maximum allocation is £50,000. Those who applied for between £25,000 and £50,000 of additional stock were awarded about 71 per cent of their request.

In total, some 492 million shares, worth about £1.13bn at the issue price, were allocated to retail investors, while 501 million were allocated to institutional investors. Members, customers and employees are expected to hold about 75 per cent of the company after the flotation, with institutions holding the remainder.

Customers have been incentivised to hold on to their shares, and will be rewarded an extra one for every 20 they still hold in a year.

Sir Brian Stewart, Standard Life's chairman, said: "We have seen tremendous support for Standard Life's IPO. By increasing their investment in the company, members and customers have demonstrated their continuing belief in the prospects for our business. Together with the substantial investment by institutions from around the world, this represents a powerful commitment and provides a platform for future development.

"On Monday, Standard Life will start an important new chapter in its history and it is our task to make the most of the opportunities that lie ahead of us."

Shares in the group are expected to get off to a positive start, with several key institutions believed to still be keen to get their hands on them. Once the company enters the FTSE 100, several UK tracker funds will be obliged to have significant stakes in the company.

The spread-betting firm IG Index said last night that it had a spread of 237p to 244p for bets on where the stock would close after its first day of trading.

The launch of the float will be a relief for the chief executive Sandy Crombie, who was forced to slash the bottom end of the float price range by 12 per cent last month, as UK markets continued to tumble. Although he considered postponing the float, he said the company was now a "juggernaut" on the road to market, and would have been very difficult to restart once it had been stopped.

Markets have recovered slightly in the weeks since. But the float price of 230p a share is still below the original proposed range of 240p to 290p set in April.

Standard will raise £1.1bn from the float, which it intends to use to shore up its capital position, and to fund future growth.