Direct Line's initial public offering today represents good value for those looking to buy, according to stock analysts.
Investment experts have said the shares, which were originally priced at 175p and go on sale today, are at the right price - with some stock brokers even saying they are "priced to go".
It's estimated that 15% of the stock will go to private shareholders, and shares had already experienced a short rally this morning, rising 3% to 181p in conditional trading on Thursday morning, according to Reuters.
Demand has been strong, according to retail stockbrokers, of which 20 were appointed to take orders from investors. Around 25,000 applications are reported to have been received, according to a report in the Telegraph.
Richard Hunter, head of equities at Hargreaves Lansdown, told the paper "thousands" of buyers had registered for shares since the initial pricing details were announced.
"The issue seems to have captured the retail investor's imagination, with a well known brand in the midst of a turnaround story appealing. The additional possibility of a decent dividend yield is also an attraction given the current interest rate environment," he said.
Tim Whitehead, investment manager at Redmayne Bentley told Huffington Post UK that there were likely to be two points of resistance for this first tranche of shares, one at 185p, where the price hits 10p over the original asking price and again at 192p, where it represents an additional 10% of the asking price.
"Thereafter, we don't think we'll see the price rising much more than 200p; the brokers have priced it spot on," he said.
The relatively cheap asking price reflected the fact there were future tranches of shares to be floated and the fact that the Competition Commission is currently looking at the car insurance market, Whitehead continued.
And the fact court judgment yesterday ruled that only personal injury claimants who seek compensation after 1 April next year will enjoy an increase in damages – and not those who make claims before then but whose cases are settled afterwards - was a boon for the shares too. Whitehead estimates a decision which went the other way could've hit shares by as much as 7p.
"The more important point is whether Direct Line will be able to meet its cost cutting targets of £100m over the next few years," he concluded.
Eamonn Flanaghan, head of financials at stockbroker Shore Capital, told Huffington Post UK that there may be some initial investors who buy shares and sell them on again quickly to take advantage of the expected initial uplifts in share price.
"They were talked down quite a bit in the run up to the IPO, so there could be some upside," he said.
"In the medium term, only 30% of the stock has been placed today, which means another 21% has to be placed in 2013. The Competition Commission makes the future uncertain, but for today it's been priced well with an attractive yield of 7-7.5%."