Genworth Financial Inc. (GNW), the life insurer and mortgage guarantor, postponed the initial public offering of its Australian unit backing home loans to early 2013 after “elevated” losses in the nation this year.
The offering of up to a 40 percent stake in the unit had been targeted for the second quarter of this year, the Richmond, Virginia-based insurer said in a statement. The business has a book value of about $2 billion, Edward Shields, an analyst at Sandler O’Neill & Partners LP, said in November.
“This new time frame primarily reflects business performance in Australia,” Genworth said in the statement. The jump in losses occurred as lenders accelerated foreclosures, particularly in coastal areas of Queensland state as a result of flooding and a regional economic slowdown.
Chief Executive Officer Michael Fraizer, 53, who’s run Genworth since its IPO in 2004, is battling a share price decline as the worst U.S. housing crash in seven decades drains capital at mortgage insurers, which pay lenders when homeowners default and foreclosures fail to recoup costs. Fraizer, who had his annual bonus cut this month, has sold a stake in a Canadian operation and retreated from the variable-annuity business.
Genworth had appointed Goldman Sachs Group Inc. (GS), UBS AG, Macquarie Group Ltd. and Commonwealth Bank of Australia (CBA) to manage the IPO, said a person with knowledge of the matter. The insurer will report first-quarter earnings on May 2.
Companies have raised A$53 million ($55 million) in IPOs in Australia this year, less than a quarter of the A$227 million raised in the same period last year, according to data compiled by Bloomberg.
“In this kind of market any IPO needs a very compelling story, a bargain element to the pricing and clear growth prospects,” Shannon Finch, a Sydney-based partner at law firm King & Wood Mallesons said. “The pain in Genworth’s market is clear from their own description. All companies have these reality checks along the way when considering an IPO.”
The IPO may have been one of the largest share sales in Australia since railway operator QR National Ltd. (QRN) listed in November 2010. CLP Holdings Ltd. (2), Hong Kong’s biggest electricity producer, plans to sell shares in Australian power company TRUenergy Holdings Pty this year, a person familiar with the matter said in November.
Australian home loan delinquencies rose unexpectedly in the three months ended Dec. 31 as a stalling housing market kept a lid on financing options for homeowners, Fitch Ratings said last month.