Standard Life Flotation: Shares open higher

10 July 2006

Set against a slightly weaker UK market following on from some nervous trading in the States on Friday, Standard Life shares made their debut this morning. The shares opened initially at 243p, a 5.5% premium to the issue price of 230p.

In early trading the shares have generally held this level, although inevitably there has been some early selling from retail investors cashing in their windfalls immediately. This selling pressure has been more than offset by some strong institutional buying, such as tracker funds ensuring that their weightings are correct ahead of Standard Life's inevitable entry into the FTSE100 in September (if not before).

It will probably be a day or two before the dust settles sufficiently to gauge whether the price has found its level and whether there remain any large blocks of sellers (or indeed buyers) waiting in the wings for the price to hit a certain level before they pounce.

Overall, the market's initial consensus of a hold seems to have been justified if the initial share price movement is anything to go by. Concerns around the success of the with profit funds, along with a potential exodus of customers now that the shares have floated remain, as does the fact that the company will now face more scrutiny from the market as a high profile FTSE100 constituent.

Nonetheless, the fact that the possibility of a bid approach will also be in investors' minds – and a continuing stabilisation of the shares which should prevent any short term price shocks. This means that the consensus of a “hold” is unlikely to have changed now that the shares are up and running. Visit the Hargreaves Lansdown website to request a free copy of the full report.

Richard J Hunter
Head of UK Equities
Hargreaves Lansdown Stockbrokers