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Thursday, 25 May, 2000, 12:26 GMT 13:26 UK
Prudential puts price on Egg
Prudential headquarters in London
UK life insurance and pensions group Prudential says shares in its internet bank Egg will be priced at 130-175p per share when floated on the stock exchange next month.

What we are doing here is a very solid business move, a strategic move, not something that is opportunistic

Jonathan Bloomer, Prudential chief executive

The price means the Egg group - which was one of the pioneers of online banking in the UK when it was launched in October 1998 - will be valued at between 1.1bn and 1.4bn.

This is well below estimates earlier in the year before the collapse in tech stock prices, some of which had valued Egg at up to 4bn.

After admitting to having had second thoughts about the timing of the float, Prudential decided to go ahead despite worries over continuing stock market volatility.

Egg share offer website information
Egg: Flotation in June

Prudential plans to offer 18% of Egg's share capital. Egg will award its directors and some senior managers about 4 million shares plus cash payments totalling 830,000.

Egg has one million customers and deposits of nearly 8bn.

In the three months to 31 March, the bank says its losses before tax were 38.3m - but it still expects to break even during the fourth quarter of 2001.

The bank wants to use the money raised by the flotation to expand through acquisitions.

Mike Harris, Egg's chief executive, said he had three potential goals for acquisitions: to expand internationally, particularly into Europe; to buy in technology; and to acquire innovative internet business models.

Payment details

About 800,000 customers are estimated to be eligible to take up the share offer, but there has been concern whether the offer mechanism could shut out some of them.

Egg has stipulated that share applications by private investors must be paid for using Switch or Visa debit cards, and those without such facilities will miss out.

Other investors may be scared away by the flop of recent market flotations like that of Lastminute, Interactive Investor International and WorldOnline.

Shares in technology companies have been taking a pounding since the euphoria of early in the year and several companies have reviewed their flotation plans.

London's Techmark index has fallen about 50% since its all-time high of 5753.46 on 6 March.


The Cardiff-based video-on-demand company, Yes TV, said on Monday it was ditching its plans for a listing.

Internet services company Telecity also postponed floating, saying it would wait until conditions had stabilised.

Telecity's chief executive, Mike Kelly, said: "We see the initial public offering of Telecity as the beginning of a relationship with the capital markets.

"We feel it is best for all concerned to enter into such an important relationship in more stable market conditions."

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See also:

10 May 00 | Business
Prudential confirms Egg flotation
18 Feb 00 | Business
IF joins Egg, Smile, Cahoot
20 Mar 00 | Business
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