Late Rush Will Drive Up Nrma Share Price
Sydney Morning Herald
Wednesday August 2, 2000
More than a million NRMA members are facing the prospect of a windfall after a late rush for shares in the organisation's demutualised insurance arm.
The demand to buy extra shares has been so intense over the past few days that the organisation is likely to boost the pool of stock set aside for members.
This would, however, force a cut in shares available to institutional investors, setting the scene for a market scramble when NRMA is listed on Tuesday, pushing up the stock's price.
Just five days ago it was estimated that only 23 per cent of share allocation forms being returned to NRMA were from members wanting to take up the offer to buy another $500 worth of stock.
At that stage, with only 880,000 returns processed, another 23 per cent wanted to sell their shares. The rest were opting to keep their allocations.
But when the deadline for returns passed at 9am yesterday it is believed the proportion of members wanting to buy more shares had leapt to about 30 per cent.
One source said the ``overwhelming majority" of the 40,000 declarations received yesterday morning were applications to buy, indicating that tens of thousands of members spent the weekend reaching for their chequebooks.
NRMA originally agreed to put aside a quarter of a pool of surplus shares made up of stock unwanted by members as well as shares to be unloaded by the road service arm for other members to buy.
The remaining 75 per cent would have been left for the large institutional investors.
NRMA could respond to the unexpected demand by cutting to below $500 the value of extra stock being offered for sale to each shareholder.
But it is now understood NRMA is more likely to meet the membership demand, cutting back instead on shares for institutional players. ``The 25 per cent figure was never fixed anyway," the source noted yesterday.
By the time yesterday's deadline passed, 1.63 million NRMA members had returned their declarations 500,000 of them since the deadline was extended on Friday.
Dozens of staff have been working two shifts a day at the office of ASX Perpetual Registrars to sort the documents.
The processing is expected to be finished today. The share price will be set on Sunday, and those who decided to sell their stock should begin receiving cheques about 10 days after the listing.
Members rush $500 offer Page 21
© 2000 Sydney Morning Herald