Aviva looks to make £1bn in Delta Lloyd sale

Published on Monday 19 October 2009 21:03

INSURER Aviva expects to pocket 1.2 billion (£1.1bn) to fund acquisitions and internally generated growth, when it floats its loss-making Dutch unit, Delta Lloyd, in Europe's largest share offering this year.

The insurance giant said yesterday that Delta Lloyd shares would be offered on Euronext's Amsterdam exchange at between 15.5 and 19 each, valuing the business at 2.6-3.1bn.

About 42 per cent of Delta's shares will be sold, leaving Aviva as the group's biggest investor, with a 58 per cent holding. The balance is held by Dutch charitable trust Fonds NutsOhra.

Andrew Moss, the British insurer's chief executive, said: "This step, which will be the largest IPO (initial public offering] in western Europe this year, will free up capital for us and give us the option of exploring further growth opportunities."

In the stock market, Aviva's shares closed down 6.8p at 443.5p.

Peter Eliot, insurance specialist at broker MF Global, said: "There are no surprises there. The timing and details were as people were expecting.

"From Aviva's point of view, it is probably less than they would have like to have received for it, at less than embedded value, but at the same time it (Delta] is a loss-making business."

At the upper end of the price range, the shares represent a 24 per cent discount to Delta Lloyd's market-consistent embedded value – a measure of an insurance company's worth that includes the present value of future earnings from life policies.