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Investors take to Promina float with enthusiasm

By Duncan Bridgeman

Friday 16th May 2003

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Investors finally found something to smile about this week, with a striking sharemarket debut by insurance group Promina.

Amid uncertainty about the direction of the world's major economies, the $1.9 billion float was more than well received by institutional and retail investors.

Listing at a premium, Promina shrugged off concerns that lagging stockmarkets and hefty asbestos insurance claims in the UK would push the price down.

Promina was formed after Royal & SunAlliance decided to spin off its Australasian operations in November last year.

The proceeds of the float were needed to plug a £600 million balance sheet gap.

Investors are now focusing on the stock's long-term prospects as rival insurer AMP continues to suffer in the wake of its recently announced restructuring plan.

UBS Warburg broker Campbell Stuart said it was a good start for Promina.

"It seems to have found a level now after opening up well on Monday."

Since listing on the New Zealand Stock Exchange at $2.15 on Monday, the shares climbed to $2.24 before easing back to $2.19 at press time yesterday.

Investors will be looking for new information before settling on their longer-term analysis of the stock, Mr Stuart said.

The company has forecast a $A188 million full-year profit but investors will get an indication of Promina's performance after its results are released for the six months to June.

Promina Group was the first company to have a dual primary listing on the New Zealand and Australian stock exchanges.

The shares will be included in the NZSE50 index from June 3.

While the float exceeded market expectations, there remains a big gap between support for the company and those who are more cautious, one broker said.

There are concerns the insurer does not have an earnings track record as a listed company.

Offshore fund managers bought 50% of the shares, sparking some speculation that shareholders in Royal & SunAlliance had used the trade to boost the British insurer's share price.

International investors paid $A1.80 for each of their shares while retail investors paid $1.90 in New Zealand.

Retail investors were allocated 25% after the shares were scaled back to meet demand.

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