UPDATE 2-German insurer Talanx says IPO back on
* Talanx pushes ahead with IPO after cancelling it last week
* Cuts amount expects to raise to roughly 500 mln euros from 700 mln
* IPO to value Talanx at 4.4-5.0 bln euros
* Share price range set at 17.30-20.30 euros, listing on Oct. 2
* Bookbuilding starts Friday, ends Oct. 1
By Jonathan Gould and Arno Schuetze
FRANKFURT, Sept 20 (Reuters) - German insurer Talanx has revived plans for a stock market flotation, returning with less ambitious expectations just a week after renouncing a move to list when potential investors baulked at the price it wanted for its shares.
"This is a bad joke. What could possibly have changed in the last few days?" asked one Germany-based fund manager, whose company's policy did not allow him to be named.
The flotation of up to 29 million new shares in a price range of between 17.30 and 20.30 euros, planned for Oct. 2, will value Germany's third-biggest insurer at between 4.4 billion euros ($5.8 billion) and 5.0 billion, Talanx said on Thursday.
It had previously seen a valuation of 4.8 billion euros as the extreme low end of the acceptable range, but interest it had received ahead of the cancellation last week was closer to 4.2 billion, one source familiar with the situation told Reuters.
Talanx said it planned to raise 500 million euros through the float, down from 700 million, with bookbuilding starting this Friday.
The decision to make a second attempt at a listing will test Talanx's ability to make a credible case with investors, after the insurer had publicly discussed a flotation for more than a decade, only to unveil a surprise cancellation of the plan last week.
Chief Executive Herbert Haas had said in a newspaper interview last week the insurer would "certainly not" hazard another go at a listing in the next six months.
In addition to the lower amount it is now seeking, Japanese life insurer Meiji Yasuda will convert a 300 million euro convertible bond which it holds into Talanx shares at the IPO price. This will give Talanx a "free float" of readily tradeable shares of about 12 percent.
The potential for low liquidity in the share due to the low level of shares being issued was already seen as a reason investors were reluctant to back Talanx last week.
"The free float will (be) ... too little for many investors", said fund manager Dirk Sebrechts from KBC Asset Management, adding he expects the IPO to be priced at the lower end of the range.
SLUMP IN VALUATIONS
Haas, however, said Talanx had received many responses from investors over the last couple of days. "Based on these conversations we have come to the conclusion that the market will be receptive to an IPO of Talanx," he said.
The insurer had announced on Sept. 3 that it planned to pursue a flotation in the autumn and that its current sole shareholder, mutual insurer HDI, would remain the majority shareholder after the listing.
However, Talanx was stunned by a slump in investors' valuation of the company between Sept. 3 and Sept. 12, when it became clear that price indications were more than 10 percent below the lowest value it was prepared to accept.
"I do not see anything dishonourable in Talanx's behaviour," said Juergen Meyer, head of European Equities at SEB Investment Management in Frankfurt. "If Talanx could not find investors at its own price expectations and now can find them at a lower volume, that is completely OK."
Talanx blamed its banking consortium for being misled on the price, which gave little value to Talanx beyond its 50.2 percent stake in the world's third-biggest reinsurer, Hannover Re , along with recently acquired operations in Poland and the cash raised in the flotation itself.
The statement on Thursday showed Talanx had weeded out J.P. Morgan and Citigroup from the list of joint global coordinators.
It retained Deutsche Bank and elevated Berenberg Bank, while Citigroup and J.P. Morgan are now acting as joint bookrunners.
Talanx said it would use the cash raised in the IPO to finance growth, particularly in industrial insurance and in emerging markets, as well as to repay loans linked to recent acquisitions in Poland.
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