July 7 (Bloomberg) -- Shares of Genworth MI Canada Inc., the mortgage insurance unit spun off by Genworth Financial Inc., fell in the first day of trading on the Toronto Stock Exchange.

Shares of the Oakville, Ontario-based company dropped 61 cents, or 3.2 percent, to C$18.39 at 4:10 p.m. on Canada’s main stock exchange. The stock was priced at C$19 in the C$850 million ($735 million) initial public offering.

Genworth Financial, the Richmond, Virginia-based insurer that failed to qualify for U.S. aid, said in May it would sell a minority stake in its Canadian unit through the IPO led by CIBC World Markets, Goldman Sachs Group Inc. and Scotia Capital. The insurer has had four straight quarterly losses.

The banks have an option to buy an additional 6.7 million shares by Aug. 6 to meet demand. If the option is used, Genworth Financial will own 56 percent of the Canadian business, according to a statement today.

Genworth’s IPO was the biggest in Canada in 18 months. Magma Energy Corp., a Vancouver-based geothermal power company that raised C$100 million in its IPO last month, fell 2 cents to C$1.48 in its first day of trading today.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

Last Updated: July 7, 2009 16:23 EDT