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Pru proceeds with Egg IPO
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May 24, 2000: 8:34 a.m. ET
UK's largest insurer presses ahead with listing of Internet banking arm
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LONDON (CNNfn) - British insurer Prudential brushed off concerns regarding the stock market debut of Egg, its Internet bank arm, and said Wednesday it will go ahead with the offering despite the decline in technology stocks.
"The initial public offering (IPO) of Egg is proceeding as planned. A further announcement will be made later this week," Prudential said in a short statement.
Tuesday Prudential said it was reviewing the flotation of the minority stake, following further turmoil among technology stocks. Prudential was due to publish a prospectus this week for a launch in June.
A raft of U.K. Internet companies canceled their initial public offerings (IPOs) this week, but Egg would have been the largest casualty in Britain so far. 
Sources close to the company indicated that the announcement would include a prospectus for Egg's IPO, a pricing range and how much of the firm Prudential intends to sell.
Analysts warned, however, that pressing ahead with an IPO in the current choppy markets represents something of a risk.
"We're coming to an environment where it's almost impossible to get any deal done," according to Peter Misek, media, Internet and technology analyst at Chase H&Q in London. He warned that many investors are no longer prepared to make the leap of faith required to back Internet firms, with several recent IPO disappointments spoiling the market for new issuers.
Britain's largest insurer announced its intention to list Egg in early May, although the recent hammering of technology shares in Europe, Asia and on Wall Street has raised concerns about the valuation of the unit.
Initial estimates valued the entire company at something like £4 billion ($5.9 billion), although press reports Wednesday indicated that figure could have come down to something like £1.5 billion. The Financial Times reported Wednesday that Goldman Sachs, an adviser to the IPO, would set a very wide price range for the shares in an effort to get the deal off the ground.
Misek of Chase H&Q pointed to the disastrous performance of European IPOs earlier this year from World Online to Lycos Europe as indications of the choosier attitude prevailing among investors. The stocks have plummeted 40 to 75 percent from their issue prices. World Online's founder was forced out last month following investor criticism for selling her stake in the company at a steep discount prior to the IPO.
"It's a shame that first-quarter IPOs (in Europe) were so aggressively priced," Misek said, although he conceded Egg is a different case to many Internet IPOs, because it can leverage from Prudential's existing business.
Although many smaller Internet-related companies have endured a rough ride this year following their IPOs, or even canceled them altogether, the largest Internet company to hit the market in 2000 has done well. T-Online, the Web access arm of Deutsche Telekom (FDTE) priced its debut in April at the bottom end of expectations when it raised  2.7 billion, valuing the company at 30 billion. Since then however, the shares have risen from 27 to 35.3. 
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Prudential
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