Genworth debuts 11% higher

On their first day of trading on the ASX, shares in Genworth Australia gained 11%.

Shares in Genworth Mortgage Insurance Australia surged 11 per cent on their first day of trading on the ASX following an initial public offering that raised $583 million.

At 12.07 PM AEST, Genworth Australia shares were up 28 cents to $2.925, according to ASX data. 

Last Thursday, Genworth Australia sold 220 million at $2.65 each in what was the biggest Australian IPO of 2014. IPO issuance in Australia this year has dropped slightly compared to 2013.

In the year to date, 13 IPOs in Australia are now trading and 14 have been priced compared with the same period last year when 16 IPOs were trading and 17 were priced, according to Bloomberg data.

Genworth Australia’s parent, the US company Genworth Financial Group, still owns a majority stake in the company and has no plans to reduce its stake in Genworth Australia any further, the company’s prospectus said.

As a lenders mortgage insurer, Genworth Australia says it facilitates residential mortgage lending by transferring risk from lenders to lenders mortgage insurance providers, predominantly for high loan-to-value-ratio residential mortgages.

Genworth Australia has a capital base of $2.6 billion, composed primarily of equity that at the beginning of this year represented 1.43 times its prescribed capital. The company says it has been profitable 46 out of the past 48 years and posted a net profit of $179.4m in 2013.

Last year Genworth Australia’s net earned premiums were $397.9m, its loss ratio was 32% and its return on equity was 8.2%. 

Goldman Sachs, Commonwealth Bank, Macquarie and UBS were the co-lead managers of the IPO.

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