2nd UPDATE: Aviva To Raise Around EUR1.1 Billion In Delta Lloyd IPO
05 Ottobre 2009 - 1:26PM
Dow Jones News
Aviva PLC (AV.LN) Monday confirmed it will float at least 30% of
Dutch financial services unit Delta Lloyd NV on Euronext Amsterdam
next month, freeing up capital for future acquisitions and marking
what would be the largest initial public offering in Europe this
year at an estimated EUR1.09 billion.
After initially rising on the news, Aviva shares at 1035 GMT
were down 10 pence, or 2.2%, at 442 pence.
The U.K. insurer said it will keep a majority stake in Delta
Lloyd in the transaction, which it had flagged in August. It holds
92% of the company.
Aviva said the offering "would bring the flexibility to pursue
balance sheet restructuring opportunities or to explore other
opportunities for growth." Aviva Chief Executive Andrew Moss in
August said he was "absolutely determined" that the company be in a
position to take advantage of possible acquisitions. Because of its
large exposure to overseas market, Aviva has performed better than
most of its U.K. peers through the financial crisis.
Aviva and Delta Lloyd executives previously said the decision to
make the IPO was made jointly.
Aviva Monday said Delta Lloyd would benefit from a new base of
shareholders supportive of its growth ambitions in the Benelux
region, and put the Dutch company in a better position as the
industry readies for a round of consolidation in the Netherlands
and Belgium.
Delta Lloyd offers life insurance, general insurance, fund
management and banking products, mainly in the Netherlands and
Belgium. At June 30, its market-consistent embedded value was
EUR4.1 billion net of minorities, including life MCEV of EUR4.3
billion, gross of minorities. It had gross written premiums for the
six months ended June 30 of EUR2.8 billion, and total assets of
EUR63.1 billion.
Eamonn Flanagan, an analyst at Shore Capital with a buy rating
on Aviva, said that suggests a 30% stake would be worth around GBP1
billion (EUR1.09 billion), and called the transaction "a smart
move" since Aviva only has two votes of eight on Delta Lloyd's
board despite its majority ownership. However, he said Aviva's plan
to explore other growth opportunities could be a worry, since
keeping capital for such possibilities is one reason Aviva cut its
dividend by 31%, to 9 pence a share, in the first half.
If Aviva raises GBP1 billion, its excess capital will rise to
GBP5.3 billion including surplus default provisions, analysts at
Oriel Securities said, keeping a buy rating on the stock. The
insurer raised about GBP500 million by selling its Australian life
and pensions and wealth management businesses to National Australia
Bank Ltd. (NAB) in a deal that completed Oct. 1.
Moody's Investors Service that month said the planned IPO could
reduce Aviva's earnings but that might be mitigated by reinvestment
of the proceeds. It said the transaction wouldn't affect Aviva's
credit ratings.
European IPO activity has been subdued this year, with data
provider Dealogic tracking just EUR635 million raised across 43
deals in the first nine months, compared with EUR54 billion in 413
transactions in the first nine months of 2007 when markets were
booming, and about EUR12 billion in 194 offerings in the same
period in 2008.
The largest IPO on a European exchange so far this year was the
GBP200 million (EUR218 million) raised by Max Property Group PLC
(MAX.LN) on London's junior Alternative Investment Market in
May.
The lead banks handling the Delta Lloyd IPO are Bank of
America/Merrill Lynch, Goldman Sachs, JPMorgan, Morgan Stanley and
Royal Bank of Scotland. A prospectus will be published by the end
of October.
Company Web site: http://www.aviva.com
-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451;
margot.patrick@dowjones.com
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