September 12, 2012 / 6:10 PM / in 5 years

Talanx cancels IPO after investors balk at price

3 Min Read

FRANKFURT (Reuters) - Talanx HDIVGT.UL, Germany's third-largest insurer, has called off plans to list its shares in Frankfurt after investors were not willing to pay the price the company had expected to achieve in the offering.

Talanx, which has been considering a flotation for more than a decade, said investors were demanding a too large discount on the company's valuation relative to what its investment banking advisers had foreseen.

"We will consequently pursue our strategy without an IPO," Talanx Chief Executive Herbert Haas said in a statement on Wednesday..

Asked if Talanx was shelving the flotation only temporarily, a spokeswoman said there were currently no new plans regarding an IPO.

With investors wary of unpredictable markets and firms reluctant to sell large chunks of their stock cheaply, Europe has seen little in the way of new listings activity over the past year.

Talanx, which sources close to the deal said had spent a lot of time sounding out potential investors, braved the market by kicking of its sale last week.

A source close to the company said Talanx was hugely disappointed at having to cancel the IPO, but felt the banks running the sale had over-advised on valuation.

Sources familiar with the situation had previously told Reuters that Talanx had hoped to raise up to 700 million euros ($900 million) from the sale of new shares and that the deal would value the company at around 5 billion euros.

Despite stocks rallying to their highest in over a year this week, investors were unwilling to accept a valuation anywhere near 5 billion euros, the source close to the company said.

Citi, Deutsche Bank and JP Morgan were advising on the offering.

Many insurers are trading below book value, with low interest rates and investor worries about the euro debt crisis weighing on the sector.

Royal Bank of Scotland (RBS.L) is expected to launch a London float of its Direct Line insurance unit this week. One financial market source said investors would still look at offerings on a case-by-case basis so Talanx's decision would not necessarily impact whether Direct Line goes ahead.

($1 = 0.7759 euros)

Reporting by Jonathan Gould, Arno Schuetze and Alexander Huebner in Frankfurt and Kylie MacLellan in London; Editing by Hans-Juergen Peters

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