Standard Life made a bright debut on the London Stock Exchange yesterday as policyholders saw the value of their shares rise by more than six per cent.

The stock began trading at 230p but strong interest from investors quickly lifted it 6.5 per cent to 245p before it closed the day 5.4 per cent higher at 2421/2p.

It was good news for Standard Life's 2.4 million members - about 111,000 of whom live in the West Midlands - who saw the value of their share windfalls make immediate gains.

Each windfall depended on the size of members' policies and how long they have been held but the average value rose from £1,475 to £1,555 by the close of trading last night.

The dealings brought to an end a two-year process for the insurer which culminated in members voting in May to end more than 80 years as a mutual company.

The group saw its value rise from £4.65 billion to £4.9 billion yesterday and is expected to be propelled into the FTSE 100 Index at the next reshuffle.

The 230p placing was much lower than the range of 240p to 290p indicated by Standard Life in the spring. Last month the company lowered the estimated range to 210p to 270p

because of recent stock market volatility.

But the price has been pushed up from the bottom end of the range by strong demand from retail investors.

Trader Ian Griffiths, of CMC Markets in London, said: "The float appears to have been a success with the price trading in the middle of its expected 210p to 270p range."

The flotation included an offer enabling members and eligible customers to buy shares at a five per cent discount.

Amid concern that policy-holders will sell their shares, Standard has offered one bonus share for every 20 held continuously for a full year after flotation.

The share offer has raised £1.1 billion of new capital for the group, which began looking at the possibility of demutualising in early 2004.

Chief executive Sandy Crombie marked the occasion by opening the London stock market yesterday, alongside London Stock Exchange chief executive Clare Furse.

He described the market listing as an "important new chapter" in the company's history.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said that while some retail investors cashed in their windfalls, this was offset by strong institutional buying, such as tracker funds ensuring their weightings were correct ahead of Standard Life's entry into the Footsie.

He added: "It will probably be a day or two before the dust settles sufficiently to gauge whether the price has found its level and whether there remain any large blocks of sellers - or indeed buyers - waiting in the wings for the price to hit a certain level before they pounce."

The initial public offering, or IPO, was the biggest in the UK since Dimension Data in 2000.

But Standard's route to market was far from easy as severe market wobbles in recent weeks resulted in a number of flotations being pulled by their backers.

At yesterday's levels, the former mutual is trading at a slight discount to its sector but is roughly in line with its embedded value - an industry measure that values how much a life insurer is worth to its shareholders - which is estimated at 240p.