The four joint lead managers of Genworth Australia’s initial public offering are beginning their briefings today with fund managers and have sent them their valuations of the mortgage insurer.
A fund manager told Data Room the analyst at Commonwealth Bank of Australia values Genworth Australia at $1.9 billion to $2.7bn. Macquarie’s analyst values the company at $2.1bn to $2.2bn and UBS’ analyst values the mortgage insurer at $1.6bn to $2.5bn.
Goldman Sachs has estimated Genworth Australia’s valuation at $1.9bn to $2.4bn.
Today, Macquarie is hosting a lunch for analysts and fund managers to brief them on Genworth’s business. A fund manager says there will be similar briefings hosted by the three other underwriters of the IPO in the coming week.
The purpose of these briefings by the analysts working at the joint lead managers is to get feedback on the level of interest and demand for shares for the IPO. Once this feedback is received, the managers of the IPO will set the timetable of the share sale.
Fund managers have not been told how many shares Genworth Australia is seeking to sell or the price range of the IPO. The proceeds from the IPO will be used to repay intragroup funding, a US Securities and Exchange Commission filing says.
Genworth Australia’s book value is $2.2 billion, according to the SEC filing. The company’s total assets are $4 billion, the filing says.
“The mortgage origination market in Australia is expected to grow by approximately 10 per cent, resulting from estimated overall system credit growth of between 4 per cent and 6 per cent,” Genworth says in its SEC filing. “The high loan-to-value ratio loan market is assumed to be stable.”
Genworth Australia expects total residential mortgage originations in Australia to increase by about 10 per cent in the 12 months to June 30, 2014. It expects that this increase will result from increased residential mortgage loan originations by its lender customers, including investment property loans.
(Reporting by Brett.Cole@businessspectator.com.au)