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City goes to work on a £3bn Egg

Goldman Sachs to advise on IPO

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Egg, the Internet banking arm of Prudential, could be worth more than £3 billion post IPO, valuing it at an astonishing £6500 per customer. The Pru, the UK's biggest life assurer, has appointed Goldman Sachs to advise on the IPO, slated for the first half of next year, according to Sunday Business. Launched in October last year, Egg has signed up 550,000 customers and taken £7.4 billion in deposits for its direct banking service, by the simple expedient of offering much better interest rates than its rivals. On average, each customer holds £17,000 on deposit with Egg, compared with £3000-4000 for building society customers. But better rates come at a hefty price for heavily lossmaking Egg. Nevertheless, the Pru is so heartened by the first year performance that that it is increasing next year's investment in Egg to £140-£150 million, up from £69 million this year. Egg is seeking 2.4 million customers by 2004, and expects to break even in 2001. Last week, Egg launched an Internet credit card and an online shopping mall in which customers earn an extra one per cent cash back on their purchases from 80 retailers. Egg is also launching an "online unit trust supermarket", according to Sunday Business. Egg is not a pureplay Internet bank. In April, the company forced new applicants to join by the Internet only. But once signed up, customers can continue to use the company's telephone banking service. ®

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