Traders are expecting to pay up to 30% above the indicated price range for shares in Internet company Freeserve when it begins trading on Monday.

Financial institutions are reported to be planning to buy the shares, which have an indicative price range of 130p to 150p, at between 189p and 197p.

Investors who have been allocated list priced shares in the UK's largest Internet service provider are expected to make a substantial profit on the first day of trading in London and New York.

Heavy demand

According to a report in the Financial Times, the issue of shares in the operation set up last year by UK retailer Dixons has been 10 times over-subscribed by institutional investors.

Such has been the demand that the price being quoted by institutions planning to buy shares immediately after flotation reached 205p on Monday, before falling back.

Freeserve, the subscription-free service from electrical retailer Dixons, is putting 20% of its shares on the market.

Demand for the limited number of shares has reportedly been heavy, forcing up the price institutions are willing to pay for them once they are launched.

The company's share price values it at £1.31bn to £1.51bn ($2.02bn - $2.34bn).

Market analysts say the value of Freeserve is in its potential as a medium for e-commerce.

Uncertain market

Researchers at Deutsche Bank say this means the number of users who visit Freeserve's Website is more important than the numbers who use it for Internet access.

Freeserve built a strong client base by being the first major UK operator to offer free Internet access, launching last September.

It plans to launch an Internet-based credit card shortly, with applications and accounts handled online.

Experts expect Freeserve's share price to fluctuate wildly after the float, with the market still uncertain about Internet stocks.