Aviva’s Dutch auction sells higher than expected stake

By MARTIN FLANAGAN
Published on 07/07/2012 00:00

Insurer Aviva has begun its exit from more than a quarter of its businesses by selling a bigger stake in Dutch insurance group Delta Lloyd – for £318 million – than it had flagged just 24 hours earlier.

Aviva, the UK’s second-biggest insurance group, sold 37 million Delta Lloyd shares at €10.75 each. This compared with the 25 million it had planned to sell when unveiling a programme of disposals and cost cuts on Thursday aimed at appeasing investors irked by its flagging share price.

The group said the placing had drawn strong demand with the bigger block of shares “several times oversubscribed”. The sale cuts Aviva’s stake in Delta from 41 per cent to just below 20 per cent.

It said it would not sell any more shares for at least another six months.

Kevin Ryan, an insurance analyst with broker Investec, said: “We see this as early evidence of a new determination to re-focus the group on businesses that make a reasonable return.”

The British group acquired Delta Lloyd in 1973, but began offloading its then-92 per cent stake through an initial public offering (IPO) in 2009.

Aviva shares jumped by more than 3 per cent after yesterday’s deal was first announced, before closing up 1.2 per cent at 288p.

The shares have lost about a third of their value in the past year, worse than the 10 per cent decline for the European publicly quoted insurance sector.

Analysts said the weak performance, along with a remuneration row that led to the removal of chief executive Andrew Moss in May, partly reflects concerns over the firm’s heavy exposure to the ailing eurozone.