Talanx Said to Revive IPO Post Cancellation This Month

Talanx Said to Plan to Revive IPO After Cancellation This Month
Talanx announced on Sept. 3 a plan to raise about 700 million euros in an IPO, according to terms for the sale obtained by Bloomberg at the time. Photographer: Walter Schmidt/Talanx AG via Bloomberg

Talanx AG, Germany’s third-biggest insurer, is reviving an initial public offering it canceled last week in a bid to raise about 500 million euros ($647 million) to help finance expansion.

It will offer as much as 26.01 million shares and 2.89 million registered shares in a potential over-allotment, or greenshoe option, in a price range of 17.30 euros to 20.30 euros from tomorrow until Oct. 1, it said in an e-mailed statement today. The new stock is scheduled to trade from Oct. 2.

“We have over the last few days received numerous responses from the capital market and have held a number of discussions,” Talanx Chief Executive Officer Herbert Haas said in the statement. “We have come to the conclusion that the market will be receptive to an IPO of Talanx. We are very aware that today’s move will come as a surprise after recent events.”

Talanx called off its IPO plans for a second time in three months last week after investors balked at the price being asked by its owner, German mutual insurer HDI Haftpflichtverband der Deutschen Industrie VaG. Haas said the company won’t make another attempt for the next six months, German newspaper Handelsblatt reported on Sept. 14.

The day after Talanx canceled the IPO on Sept. 12, the Federal Reserve announced a third round of quantitative easing, sending benchmark stock indexes to the highest levels since 2007.

“The market environment continues to be favorable,” Haas said today. “We have listened carefully during the past days with the objective of fundamentally improving the preconditions for a successful completion of the transaction.”

Twice Postponed

Meiji Yasuda Life Insurance Co. will in addition receive shares at the IPO price from a 300 million-euro convertible bond that Talanx sold Japan’s third-largest life insurer in 2010.

Talanx, which has been considering the share sale for more than a decade, announced a plan on Sept. 3 to raise about 700 million euros in an IPO, according to terms for the sale obtained by Bloomberg at the time. The insurer postponed a plan to sell shares in June as the European sovereign debt crisis stoked market volatility.

HDI, also based in Hanover and owned by its insurance customers, has said it will keep a majority stake should Talanx sell shares to the public. HDI was founded by six professional associations and 176 companies from the German iron and steel industry in 1903 that were seeking better liability insurance coverage.

The company is reviving its offering as another European insurer pushes ahead with its IPO.

Direct Line

Royal Bank of Scotland Group Plc, the U.K.’s largest state-owned lender, said on Sept. 14 that it planned an initial share sale for its insurance unit Direct Line. The bank is seeking to sell about 25 percent of its stake in the insurer, according to terms for the sale obtained by Bloomberg. It could raise about 750 million pounds ($1.2 billion), based on calculations by Shore Capital Group Ltd.

Based on the price range Talanx will be valued at 4.4 billion euros to 5 billion euros, assuming full exercise of the greenshoe option, the company said.

Talanx plans to use the IPO proceeds “mainly for financing growth, with a focus on organic growth in industrial lines and in high growth emerging markets,” the insurer said, adding that it plans to repay loans for recent acquisitions of two Polish insurers.

Polish Expansion

Talanx acquired Poland’s Towarzystwo Ubezpieczen i Reasekuracji Warta SA earlier this year from KBC Group NV for 770 million euros, beating rivals in eastern Europe’s largest insurance market. When the purchase is completed in the second half of 2012, Meiji Yasuda will take over 30 percent of Warta, Poland’s second-largest insurer.

Warta was the second Polish takeover announced by Talanx within two months, after the company said in December that it will pay 912 million zloty ($284 million) for a controlling stake in insurer Europa SA. Meiji Yasuda will buy a stake in Europa from minority shareholders in a public offer.

Deutsche Bank AG and Berenberg Bank are acting as joint global coordinators and joint bookrunners, while Citigroup and JPMorgan Chase & Co. are acting as further joint bookrunners, Talanx said. Rothschild is advising the insurer on the IPO.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE