Promina Push Targets Policyholders
The Age
Thursday April 17, 2003
Sydney
The hard sell for the circa $2 billion float of financial services and general insurance group Promina has shifted to the company's customer base of 5 million policyholders amid predictions that the float will get a lukewarm response from investment-shy mum and dad investors.
Promina's biggest division, home and motor insurer AAMI, has mailed its customers to inform them they can get a priority allocation of shares worth $3500 over applicants who did not pre-register for a prospectus, following similar mail-outs to customers of other divisions.
One of the few leading analysts whose firm is not aligned to the float, UBS Warburg's Frank Costigan, said yesterday the float was not without risks and he was ``a bit cautious about how much retail demand there has been".
Mr Costigan said it was difficult to compare Promina's limited track record with established listed rivals at this stage but said: ``At the low end of the range, we think there's a bit of value there."
Retail investors will get a 10 discount to the institutional offer price, which will be set via a bidding process in May within a range of $1.50 to $2 a share. Institutions have predicted the float will be priced towards the lower end of the range.
The float's promoters have already allocated 25 per cent of the shares to the broker firm component of the offer, at the high end of its expectations and implying some interest from wealthy private clients.
But anecdotal evidence suggests small mum-and-dad investors who would apply directly rather than via a broking firm are shying away from the float, due to weak equity market conditions and the poor record of investments in Australian general insurers.
Having invested at least $50 million in marketing and rebranding expenses, the promoters said yesterday they were pleased how the offer was proceeding less than one month out from the planned listing.
``We are happy with the momentum the offer has taken on and pleased with the level of retail interest," said Mike Everett of joint global co-ordinators Goldman Sachs.
© 2003 The Age