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Aviva to offer shares in Dutch arm at a discount

INSURER Aviva is to offer shares in its Dutch subsidiary Delta Lloyd at a discount, sources familiar with the matter said yesterday, giving the unit a market value of about &pound;2.7bn.<br /><br />The group, which aims to list 30 to 40 percent of Delta Lloyd, is likely to receive 1bn euros (&pound;913m) to 1.3bn euros from the initial public offering (IPO), the sources said. The market debut is expected on November 2.<br /><br />&ldquo;There are a lot of other offerings. Delta Lloyd is competing with some large rights issues. It needs to have a discount,&rdquo; said one source.<br /><br />The offering will be at around 0.7 to 0.75 times the market consistent embedded value (MCEV) of the Dutch unit, the sources said, referring to a measure of the value of an insurance portfolio commonly used in the industry.<br /><br />Delta Lloyd&rsquo;s MCEV, which measures the value of the shareholders' interest in the in-force portfolios using market prices, stood at 4.1bn&nbsp; euros as of June 30.<br /><br />Based on those values, Aviva will need to sell closer to 40 percent of the unit to raise the targeted money.<br /><br />Aviva is to announce Delta Lloyd&rsquo;s price range today, commencing a two-week bookbuilding process, handled by bookrunners Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and RBS.<br /><br />Aviva recently announced it will have a New York listing.