Genworth seeks IPO of Australian unit
US financial services company Genworth Financial has unveiled plans to sell as much as 40 percent of its Australian insurance business through an initial public offering (IPO).
The move represents Genworth's latest attempt at securing an Australian listing for the unit, which rivals QBE as one of the biggest mortgage insurance providers in the country. It shelved plans for an IPO of the unit two years ago following concerns over the unit’s results.
In its regulatory filing in the US, the parent company said Genworth Australia wouldn't keep any proceeds from the IPO instead using it to repay debts.
The move has been welcomed by ratings agency Moody’s which said it would improve Genworth Australia's standalone financial flexibility by providing it with greater access to the capital markets and increasing the diversity of its funding sources.
“It would also serve to further reduce the linkages between the credit profile of Genworth Australia and that of its parent, in turn reducing the potential impact of unexpected downside risk arising out of the parent's operations, particularly those of Genworth's US mortgage insurance unit,” said Ilya Serov, a Moody's senior credit officer.
“We view the IPO as allowing the parent to realize the value embedded in Genworth Australia, whilst at the same time reducing the risk that the Australian subsidiary might be called upon to make an unplanned repatriation of capital to its parent, which would be negative for Genworth Australia's standalone financial position.”
