THERE is some positive news from Hannover, where Talanx Group, Germany’s third largest insurance entity, is considering a flotation.
According to sources, there’s already been a beauty parade of potential advisers and a timetable should follow in short order.
There’s one adviser in situ; Rothschild has been appointed to advise Talanx on the sale.
The task for advisers such as Rothschild – often referred to as private equity advisers because they try to get top dollar for private equity sellers – has become ever more difficult in the past couple of years because of a growing distrust amongst investors about their role after a series of underwhelming new issues.
Possibly the worst of these was Pandora, the jewellery group, whose shares sank months after floating on the Danish stock market only to suffer the ignominy of later putting out a couple of profit warnings.
Like London, the German new issues market has been pretty dormant, hit by the Eurozone crisis, general stock market volatility and depressed share prices.
Earlier this year a number of issues were pushed back, including one that Goldman Sachs had fought hard to attach itself to.
When Essen-based Evonik Industries said it was interested in floating, none other than Lloyd Blankfein, the Goldman CEO, personally turned up to the pitch to be chosen on the syndicate for what would have been one of Germany’s biggest listings in recent years.
With Talanx having premium income of about €23bn in 2010, the company is the third-largest insurance group in Germany and the eleventh-largest in Europe. It employs around 18,000 employees and also owns 47 per cent of Hannover Re, the major insurance group.
Some investors might think that should they want to have exposure to Hannover Re, they might do better to buy shares in it directly.
Talanx will be looking to raise around €1.5bn in new capital to produce a valuation of €4-5bn.
In short, the Talanx flotation could be a difficult sell, mainly because any new issue is hard work in current markets.
But that won’t stop a stampede from investment banks wanting to get involved.
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