Genworth Financial Inc Set To Launch $800M IPO Next Week

Genworth Financial Inc Set To Launch $800M IPO Next Week

Genworth Financial Inc (NYSE:GNW)’s pre-marketing research is due to hit fund managers’ desk as early as Monday, according to The Australian Financial Review.

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The Australian Financial Review’s report is yet to be confirmed by Genworth Financial Inc (NYSE:GNW), though it is consistent with management’s prior comments that they will have a potential window for a partial IPO of their Australian unit in 2Q14.

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Smart money moving to Genworth

The Federal Housing Administration (FHA), due to governmental pressures, has been hiking up its mortgage insurance premium rates. This has affected the agency’s competitiveness and led to more business flowing over to private insurers, such as MGIC Investment Corp. (NYSE:MTG), Radian Group Inc (NYSE:RDN) and Genworth Financial Inc (NYSE:GNW). This has affected the revenue flow into the FHA’s coffers.

However, this has proven to be a bonanza for private insurers, and savvy investors, such as John Paulson, have quickly spotted this opportunity. His firm acquired stakes in private insurers, including Genworth Financial Inc (NYSE:GNW), betting on a phoenix-like recovery in the sector after it almost flamed out in the housing crisis.

Australian IPO market too heating up

This year is off to a booming start in initial public offerings. EY Global IPO Trends found that in the first quarter of this year alone, there have already been 239 IPOs in markets around the globe. Those deals raised approximately $44.3 billion and continued the momentum which began in the end of 2013. The firm found that Asia was on top in terms of the numbers of deals and also the value of the capital raise.

Within the U.S., the New York Stock Exchange and the NASDAQ raised a collective $11.6 billion through 68 deals during the first quarter. In the U.S. alone, IPO activity more than doubled year over year, rising 106%. U.S.-based companies made up 84% of the world’s total offerings.

According to the Australian Financial Review, the Australian IPO market could witness $7 billion to $8 billion worth of deals done between late February and early June, which would be a dramatic turnaround from the first six months of 2013 when just $853 million was raised through IPOs, says Dealogic.

However, some caution that if China does keep slowing and the terms of trade fall faster than Australian authorities calculate in concert with the mining investment cliff, then unemployment will overshoot. If that triggers a housing correction, then it is Genworth Financial Inc (NYSE:GNW)’s business that is directly in the gun as it insures the mortgage repayments of all of the riskiest loans on the bank’s books.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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