Talanx’s IPO ‘perfectly timed’
TALANX, the German insurer that began trading on the stock market yesterday, said yesterday that the timing of its listing was “perfect” amid a rally in equities and higher insurance rates.
TALANX, the German insurer that began trading on the stock market yesterday, said yesterday the timing of its initial public offering (IPO) was “perfect” amid a rally in equities and higher insurance rates.
“The time right now is perfect,” Talanx CEO Herbert Haas said in an interview. “We have booming capital markets. We also have a perfect environment as far as the insurance industry is concerned.”
Talanx, based in Hanover, revived the share sale on September 20, a week after calling it off for the second time in three months.
The day after Talanx cancelled the IPO, the US Federal Reserve announced a third round of quantitative easing, sending benchmark stock indexes to the highest levels since 2007. Talanx rose 1.6% to ¤18.60 in Frankfurt from the IPO price of ¤18.30.
“Talanx has a cheaper valuation than its insurance peers like Allianz, which may prompt a little bit of a rally for the shares,” said Stefan Bongardt, an analyst with Independent Research. “Talanx has a very attractive dividend ratio and being strongly established in Germany gives them a stable basis.”
The IPO has a volume of about €817m, including a ¤300m convertible bond held by Meiji Yasuda Life Insurance, the company said. That makes the IPO Germany’s largest since the port operator Hamburger Hafen und Logistik’s stock sale in 2007, data show. The shares were priced at ¤18.30, Talanx said on Monday, compared with the original range of ¤17.30-¤20.30, according to a term sheet.
“We were the so-called icebreaker for the IPO market in Germany,” said Mr Haas. “If you are the icebreaker after such a long period, you have to sometimes zigzag to come to your final destination.”
Mr Haas cited vehicle insurance, reinsurance and industrial business as areas where Talanx and its competitors are able to raise rates.
The IPO may bode well for Royal Bank of Scotland Group’s plans to raise about £1bn in the initial stock sale of its Direct Line Insurance Group unit.
“Sooner or later there will be further capital increases at Talanx,” Mr Haas said. While Talanx has “sufficient” capital, the company may sell shares in 24-36 months to fund growth, he said.
Majority shareholder HDI Haftp flicht verb and der Deutschen Industrie, a mutual insurer, would not sell shares, Mr Haas said.
Talanx will use some of the funds from the IPO to consolidate its positions in Poland and Mexico and to fund growth in Brazil, Mr Haas said in the interview.
The insurer has said it will repay loans for recent acquisitions of two Polish rivals. Bloomberg