Investors scramble for stake in insurer despite concerns over Competition Commission probe into motor market
Direct Line Group (DLG) has seen a late surge of interest in its shares ahead of its flotation tomorrow.
Thousands of small investors have placed orders for the shares as the insurer prepares to float on the London Stock Exchange, according to a report in the Telegraph.
This is despite analysts raising concerns over DLG and other motor insurers given the Office of Fair Trading’s (OFT) decision to refer the UK private motor market to the Competition Commission for a full investigation.
Retail brokers Hargreaves Lansdown and The Share Centre reported a spike in last-minute demand for DLD shares ahead of yesterday’s midday deadline for share orders.
Online broker Interactive Investor said one client had requested £133,000 in shares.
The minimum order requirement for retail investors was £1,000.
The Share Centre said it had seen a 60% increase in demand over the weekend, and Hargreaves Lansdown said orders had “run into the thousands”.
RBS Group could raise almost £1bn from the DLG float, with the shares being offered at 160p to 195p.
The banking group will sell two more tranches of the insurer’s shares before the end of 2014, with total proceeds expected to be almost £3bn.
The final pricing will be announced tomorrow.
RBS has to spin off DLG as part of a state-aid deal agreed with the European Commission as a condition of the bank’s £45bn taxpayer bail-out four years ago.
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