The National Australia Bank (NAB) has surprised by cutting the pricing for its Clydesdale Bank initial public offering by around 25%.
The NAB had been tipped by analysts to value Clydesdale at £2 billion to £2.5 billion but the bank has now put forward a share pricing that would capitalise the bank at £1.54 to £2.07 billion ($A3.2 to $A4.3 billion) on the London Stock Exchange.
That would give it a value similar to the Bank of Queensland (BOQ), which had a market cap yesterday of $A4.85 billion.
The demerger, which will see NAB shareholders take a 75% stake in the UK business, with the remaining 25% sold to institutional investors, will see shares offered at 175-235 pence with the final pricing set to be announced on February 2 after the bookbuild process.
NAB paid £420 million for Clydesdale in 1987 and about £900m for the associated Yorkshire business in 1990, and has sunk billions more into the business in extra capital and the cost of write-downs and other losses.
NAB shares were down 1.18% at the close yesterday to $26.69 after the news of the pricing was released.
NAB said senior management of Clydesdale kicked off a global marketing roadshow in London last night.
NAB shareholder will vote at a meeting on January 27 on the demerger of Clydesdale, which has long been a drag on NAB shareholder returns.
While NAB has signalled its intention to push ahead with the listing despite the market volatility, the statement also said NAB could elect not to proceed with the IPO, and in this case it would retain a larger shareholding in Clydesdale.
