November 3, 2009 / 5:56 AM / 10 years ago

Delta Lloyd falls after IPO prices at low end

AMSTERDAM (Reuters) - Dutch insurer Delta Lloyd NV’s DLL.AS initial public offering, western Europe’s largest this year, fell flat on Tuesday amid a retreat in the insurance sector and competing calls on investor’s cash.

The shares, which had priced at 16 euros each, at the low end of a forecast range of 15.5 euros to 19 euros, were trading at 15.48 euros by 1147 GMT (6:47 a..m. EST), down 3.3 percent from their IPO level, having been as low as 15.23.

The DJ European insurers index .SXIP fell 2.7 percent, having dropped 10 percent since October 19, partly because the prospect of the breakup of state-aided banks has hit financials generally and partly due to general concerns stocks may have rallied ahead of the recovery.

Analysts also noted plenty of others demands on investment funds.

“There is also competition from rights issues. RBS (RBS.L) may come with a capital increase, ING ING.AS will do it. It’s a question of offer and demand, but on balance it is positive because Delta Lloyd remains attractive,” analyst Nico van Geest at Keijser Capital said.

Delta Lloyd Chief Executive Niek Hoek told reporters he had not experienced competition from bank rights issues and was not worried about the stock’s fall, saying its investors were focused on long-term returns.

“One of the problems with IPOs is that they tend to happen at the top of the market when a hype is created. That can create disappointment,” Hoek said. “This is a good level to buy into the shares.”


Delta Lloyd, the Netherlands’ fourth-largest life and property insurer based on 2008 gross premium income, had a book value of 22 euros per share at the end of June, and the books for the IPO were twice oversubscribed, Hoek said.

British insurer Aviva Plc (AV.L) will receive net proceeds of about 995 million euros ($1.5 billion) from the IPO, based on a minimum 2.5 percent of IPO fees, and excluding a potential over-allotment option of 6.35 million shares.

Last month Aviva, which wants to free up capital and potentially make acquisitions, said it wanted to sell up to 42 percent of Delta Lloyd shares.

The offering, consisting of 63.5 million shares and totaling 1.02 billion euros, is western Europe’s biggest this year and the second-largest for the whole of Europe, after that of Polish utility PGE, which was worth $2.1 billion.

Delta LLoyd, which gets 77 percent of its income from the Netherlands and the remainder from Belgium and Germany, could make acquisitions if they were attractive, said Hoek, reiterating statements made last month.

About 10 percent of the shares were allocated to retail investors in the Netherlands, while the remainder was allocated to Dutch and international institutional investors, Delta Lloyd said.

Goldman Sachs (GS.N), Morgan Stanley (MS.N), Bank of America Merrill Lynch (BAC.N), JP Morgan (JPM.N) and RBS Hoare Govett Ltd (RBS.L) were the bookrunners for the IPO.

(Additional reporting by Daisy Ku in London; Editing by Hans Peters and David Holmes)

$1=.6769 euros

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