The indicated range for the Direct Line float is between 160-195p, and is thought by many to undervalue the business by about £600m, especially in comparison to its listed peers - RSA Insurance and Admiral. Given that insurance is a necessary evil for all of us, and Direct Line built the brand and name on discounting and undercutting its competitors on price, this would seem to give the float a better chance than average.
Added to this, it would seem that HM Govt are keen to ensure this float is a success as it will have a very positive effect on the markets, bringing in new investors and money, boosting investor confidence and the economy in general.
The fact the Competition Commission enquiry was introduced just as Direct Line / RBS considered upping the float price smacks of Govt intervention - they want to keep the offer price down to ensure the float gets away and make a profit for all who take part. Frankly, having insured my daughter to drive our car, I would welcome the Competition Commission enquiry, but I also welcome the impact it has had on the indicated price range. For info Traders Own Stockbroking (£6 per trade flat fee) are participating in the offering. Link here:http://www.tradersown.co.uk/sharedealing_guide::traders_own_stockbroking.html