The company did far better than most people expected at the IPO stage. It was oversubscribed (institutions say they were scaled), it has more than 4000 New Zealand shareholders and since listing the shareprice has headed in the right direction.
At a company level it is like the Antipidean infant has finally been cut free from its fuddy duddy old parents in London.
Promina director Geoff Ricketts made much of this point at a little post listing celebration in Auckland on Monday night.
For the company it is free of the need to consult London on everything and that appears to be a great thing. Stories about the time and money wasted on consulting with and travelling to London, are easy to find.
Now the business is locally owned and has a focused and incentivised management which should see Promina develop into something quite different from the old Royal & SunAlliance.
Also in its favour is the fact that the business has no debt on its balance sheet. At an industry level the IPO marks a major step away from the trend we have seen for demutualisations in the industry. (Clearly RSA wasn’t a mutual so couldn’t go down this route).
One has to question the whole demutualisation process of the late 1990s and ask whether it was the correct or best thing for many of the businesses involved. Tower and AMP are the most glaring examples. Both firms raised vast sums of money which has been used for expansion into new markets (Australia and the United Kingdom) and both failed.
A pertinent question to ponder is whether demutualisation has been in the best interests of former members and subsequently shareholders.
The answer for shareholders would have to be an emphatic no, and there is less (although adequate) security for policyholders.
There are lessons for Promina here. Stay focused, don’t try and conquer the world and work on your business.
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