Tuesday, June 30, 2009 1:41 PM
Genworth rolls out $850-million IPO
Andrew Willis
One of the largest IPOs seen this decade is ready to roll, as Genworth MI Canada sets the terms on an $850-million debut.
Genworth, the domestic arm of a U.S. mortgage insurer, will sell 44.7 million shares at $19 each, with underwriters holding an option to sell an additional $127-million of stock.
If the deal does total $977-million, this will be the largest initial public offering seen this year on the Toronto Stock Exchange, and dealers say that it will likely be the fourth largest IPO on the TSX since 2001.
The NYSE-listed parent is rebuilding its own balance sheet by selling a minority stake in its profitable Canadian subsidiary. Dutch insurer ING Group did much the same by selling a stake in its Canadian unit several years ago, then selling the entire company into public markets earlier this year.
The proceeds of this share sale will be split, with $753-million going to Genworth Financial, the U.S. parent, and $97-million earmarked for paying down debt and building the business of the Canadian unit.
CIBC World Markets, Goldman Sachs and Scotia Capital led the Genworth IPO. This deal is backed by most of the Street, as there are a total of 11 dealers in the selling syndicate. Genworth is clearly hoping to be covered by the entire Canadian dealer community.
Assuming the underwriters do exercise the over-allotment option, which they usually do, this IPO will result in the U.S. parent owning 56 per cent of the company, and public shareholders holding a minority stake.
