UPDATE 2-Partnership Assurance joins London listings revival

Fri Jun 7, 2013 8:15am EDT

* Chief Executive Steven Groves' stake worth 48 mln pounds

* Cinven made return of more than seven times on investment

* Blackrock, GIC among new shareholders

By Kylie MacLellan

LONDON, June 7 (Reuters) - Private equity-backed life insurer Partnership Assurance Group made a robust London stock market debut on Friday, in the strongest year for British company listings on their home patch since the financial crisis.

British firms, including insurer esure and estate agent Countrywide, have raised a total of $3.4 billion from initial public offerings (IPOs) on the London Stock Exchange's main market so far this year, the highest year-to-date volume since 2007, Thomson Reuters data showed.

Improving stock markets have encouraged companies to test the water for listings again after many held off following the 2008 financial crisis, with a backlog of private-equity-owned businesses helping boost the number of home-grown London IPOs.

Total IPO volumes on London's main market, including overseas companies, hit a post-crisis peak of $13.9 billion in 2011.

Partnership said on Friday it had sold its shares at 385 pence each, in the upper half of its 325-400 pence range and valuing the company at 1.54 billion pounds ($2.4 billion).

The stock enjoyed a strong debut, opening 17 percent above the listing price at 450.5 pence. By 1152 GMT it was trading at 455 pence, having earlier hit a high of 480 pence.

Partnership sells annuities which pay out more to customers with medical conditions such as diabetes and heart disease who might otherwise find it hard to get cover, as well as insurance to fund long-term residential care.

It claims a 26 percent share of the 4.5 billion pound non-standard annuities market in Britain and last month reported an operating profit of 112 million pounds in 2012, a 42 percent increase on the year.

The listing price values Partnership, which expects to be eligible to join the FTSE250 index, at around 11.7 times forecast 2014 earnings. That compares with 11.5 times and 13 times respectively for competitors Legal & General and Prudential.

Shore capital analyst Eamonn Flanagan said Partnership's use of reinsurance companies to take on the risk that someone lives longer than it expects, reduces the amount of capital it needs to hold, boosting its return on equity.

CINVEN RETAINS MAJORITY

The share sale raised a total of 485 million pounds for the company and its selling shareholders, including 125 million from new shares which Partnership said it would use to pay down debt.

"I now look forward to executing the next phase of our strategy to expand our reach and market share further," Chief Executive Steve Groves said in a statement.

At the listing price, Groves' own stake in the company was worth 48 million pounds. He will bank around 12 million pounds from selling a quarter of his holding in the IPO.

Majority owner Cinven, which acquired Partnership for 158 million pounds in 2008, said it had made a return of more than seven times its original investment.

The size of the sale could be increased by up to 15 percent if there is strong demand. Assuming this over-allotment option is exercised, Cinven will retain 52 percent of the company.

Partnership's sale was 10 times oversubscribed at the listing price, two people familiar with the matter said, with 75 percent of orders coming from UK and US mutual funds. Earlier this week it brought forward the close of the offering by several days, indicating strong demand.

Offer documents showed Blackrock, the world's largest fund manager, bought a 3.4 percent stake, while Singapore's sovereign wealth fund the Government of Singapore Investment Corporation (GIC) took 3.1 percent.

Bank of America Merrill Lynch and Morgan Stanley ran the share offer.