| Aviva to raise about 1.2 billion euros by selling shares of Delta Lloyd NV |
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19/10/2009 13:52 (846 Day 09:34 minutes ago) | |||||
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The FINANCIAL -- British insurer Aviva plans to raise about 1.2 billion euros ($1.8 billion) for future growth and possible acquisitions by selling shares of Delta Lloyd NV in an initial public offering that values its Dutch unit at 2.6-3.1 billion euros.
Aviva is offering 42 percent of Delta Lloyd in the IPO, which will value the Dutch insurance unit at as much as 3.1 billion euros, the company said in a statement on October 19, Bloomberg reported. Aviva is selling Delta Lloyd shares at 15.50 euros to 19 euros apiece. The U.K. insurer is holding the IPO, the biggest in western Europe for 17 months, after investment losses depleted reserves during the financial crisis. It’s betting that a 68 percent rise in global stock prices since March and a low valuation will lure investors.
“This is a sensible move,” Barrie Cornes, a London-based analyst at Panmure Gordon & Co., wrote in a note to investors. “The net proceeds could be used to strengthen the balance sheet or make acquisitions,” said Cornes, who rates Aviva “buy,” according to the same source. The IPO values Delta Lloyd at a discount to its so-called embedded value of as much as 35 percent, Cornes said. The valuation is at a premium to Aviva’s so-called market consistent embedded value, a measure of its insurance portfolio, he added.
Delta Lloyd shares will begin trading on the Euronext Amsterdam market on November 3, AFP informs. "This step, which will be the largest IPO in western Europe this year, will free up capital for us to use elsewhere and will give us the option of exploring further growth opportunities," said Aviva Chief Executive Andrew Moss in the statement.
Delta Lloyd offers financial services including life insurance, general insurance, fund management and banking products, mostly in Belgium and the Netherlands, according to the same source. The insurance giant will offer institutional and retail investors about 63.5 million ordinary shares at 15.50-19.00 euros each. Aviva will retain a 57-percent stake in Delta Lloyd, and 53 percent of voting rights.
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