LONDON: The wayward behavior of the stock markets may force the U.K.'s mutual insurer Standard Life to cut the price of the initial public offering, which in turn will sharply reduce the expected windfall to its policyholders, according to analysts.
According to market speculation Friday, the company may cut the value of its flotation by 10 per cent, meaning the IPO will now be worth 4.4 billion pounds to 5 billion pounds, which is down from the earlier projected value of 4.8 billion pounds to 5.5 billion pounds.
The FTSE 100 has fallen by about 7.5 per cent since the indicative value of the IPO was given in April.
The 10 per cent cut will give the company's 2.4 million policyholders an average 1,500 pounds by way of expected windfalls against the earlier projection of 1,700 pounds.
The company is expected to publish the listing range Thursday. 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.
The insurer had expected to raise 1.1 billion pounds in the biggest IPO in the country since 2001.
The stock markets had a terrible day Friday, when nearly 35 billion pounds was wiped off the blue chip shares as global stock markets went on a roller-coaster triggered by fears of the U.S. increasing its interest rates.
