Capital Markets

GE Launches Biggest IPO in Two Years

The sale of equity units and preferred stock in Genworth Financial raised $3.43 billion.
Stephen TaubMay 26, 2004

It’s beginning to look a lot like 2002. In the largest initial public offering since July of that year, according to Bloomberg, General Electric Co. sold 30 percent of life and mortgage insurer Genworth Financial Inc.

The deal raised $3.53 billion, making it the biggest IPO since CIT Group Inc., a commercial finance company, raised $4.89 billion, according to the news service. The Genworth offering included the sale of equity units and preferred stock.

The price of the IPO’s shares fell at the opening because GE didn’t receive its expected price the night before, Bloomberg reported. GE sold 145 million Genworth shares at $19.50 each, 7.1 percent below the anticipated range of $21 to $23.

General Electric Chief Executive Officer Jeffrey Immelt reportedly said he plans to sell another 30 percent next year and will eventually divest the whole unit.

Genworth doesn’t meet the return-on-equity goals of 20 percent to 25 percent that Immelt has set for other finance units of the conglomerate. It also lags several other insurers by that measure, Bloomberg noted.

“The market wasn’t very enthusiastic about the fact that Genworth has a 9.5 percent return on equity while many of its peer companies — MetLife for example — have returns that are meaningfully higher,” Elizabeth Malone, an insurance analyst at Advest Inc., told the news service before the stock began trading.

Genworth will now have to await the sales of shares of Google to see who will wind up the IPO champ of 2004. The search engine is expected to raise about $2.7 billion, according to CBS MarketWatch.