Insurer’s share price closed at 188p

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Direct Line Group’s share price closed at 188p in its first day of trading, up 7.4% on its offer price of 175p.

The insurer, which is majority-owned by banking group RBS, made its debut on the London Stock Exchange yesterday, trading on a conditional basis.

Full, unconditional trading in the stock will begin next Tuesday.

RBS floated 30% of its stake in Direct Line Group yesterday, and is expected to list the remainder in two further tranches.

RBS has to sell the majority of its stake by the end of 2013, and its entire stake by the end of 2014, under the conditions of its bail-out by the UK government in the financial crisis.

The initial public offering (IPO) raised net proceeds of £766.4m, assuming the over-allotment option is not exercised, and valued the entirety of Direct Line Group at £2.625bn.

Direct LIne Group’s net tangible asset value on 30 June 2012 was $2.5bn. This would put its net tangible asset value per share at 167p.