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Insurance giant Aviva to Raise About 1.2 Billion Euros From Dutch business Delta Lloyd IPO

By Janina Energin for CEOWORLD Magazine Updated:October 19, 2009

UK-based insurance giant Aviva plc (AV.L) said Monday that the initial public offering of its Dutch business unit Delta Lloyd (AMS:DLIF) unit has been priced at between 15.50 euros and 19 euros a share, giving the unit a value of between 2.6 billion euros and 3.1 billion euros.

The offering will comprise up to 63.50 million ordinary shares and an over-allotment option of up to 6.35 million ordinary shares, which represents approximately 42% of Delta Lloyd’s share capital.

The proceeds of the IPO are expected to be around 1.2 billion euros. Delta Lloyd life new business sales for the nine months to Sep. 30 were 2.8 billion pounds, down 12% compared with the previous year. Shares in Delta Lloyd are expected to begin trading on Nov. 3.

The companies said that the offering will comprise up to 63.50 million ordinary shares and an over-allotment option of up to 6.35 million ordinary shares of Delta Lloyd. The offer price will be determined through a book-building process.

As per the companies, the IPO will consist of a public offering to institutional and retail investors in the Netherlands plus a private placement to certain institutional investors in a number of markets. The IPO will lead to Delta Lloyd listing on Euronext Amsterdam, subject to market conditions. Delta Lloyd’s shares are expected to begin trading on November 3.

The companies also said that the offering consists only of ordinary shares to be offered by CGU International Holdings B.V., a wholly-owned, indirect subsidiary of Aviva. No new ordinary shares will be issued by Delta Lloyd as part of the offering. Aviva and Delta Lloyd have agreed to a ‘lock-up’ for a period of 180 days from the first trading date.

Delta Lloyd’s MCEV, which measures the value of the shareholders’ interest in the in-force portfolios using market prices, stood at 4.1 billion euros as of June 30.

Based on those values, Aviva will need to sell closer to 40 percent of the unit to raise the targeted money.

Aviva is to announce Delta Lloyd’s price range on Monday and start a two-week bookbuilding process, handled by bookrunners Bank of America Merrill Lynch (BAC.N), Goldman Sachs (GS.N), J.P.Morgan (JPM.N) and RBS (RBS.L).

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