Advertising

The Seattle Times Company

NWjobs | NWautos | NWhomes | NWsource | Free Classifieds | seattletimes.com

Business / Technology


Our network sites seattletimes.com | Advanced

Originally published September 29, 2010 at 5:50 PM | Page modified September 30, 2010 at 1:04 PM

Comments (0)     E-mail E-mail article      Print Print      Share Share

Safeco parent Liberty Mutual postpones unit's IPO

Liberty Mutual Holding Co., the policyholder-owned insurer, postponed the largest U.S. initial public offering of 2010 as demand ...

The Associated Press

NEW YORK — Insurer Liberty Mutual delayed the initial public offering of a subsidiary that could have been the largest U.S. IPO of the year because demand for its shares was too weak.

The high-profile postponement is a reminder that it's still a buyer's market for IPOs. Boston-based LibertyMutual was asking too high a price, analysts said. The strong performance of other recent debuts suggests that investors are still willing to buy shares of many companies that have been waiting to go public.

Companies that had delayed IPOs earlier this year and last year, such as Rhino Resource Partners and Daqo New Energy, are lining back up again. This time, they're setting a lower price for their shares or offering less stock.

Liberty Mutual Group, which acquired Seattle-based Safeco in 2008 for $6.2 billion, said the weak economy, volatile stock market and "undervalued" prices for stocks of property and casualty insurers led to the delay.

It said it was unable to "receive appropriate value" for shares of its Liberty Mutual Agency, which sells property and casualty insurance — about half of it sold to individuals under the Safeco Insurance brand.

IPO investors are "very selective" now, said Josef Schuster, the head of investment firm IPOX Schuster, which specializes in IPOs. He said Liberty Mutual could probably have made it to market by offering shares at a lower price.

Pricing low has become a common strategy for companies that want to go public in a turbulent stock market. Nearly half the companies that went public this year sold shares of their IPOs below expected ranges, according to IPO research firm Renaissance Capital.

Other companies recently have been successful raising funds from capital markets. While only five companies have gone public so far in September, three of those have made big gains for their investors. Shares of Chinese real-estate-website operator SouFun Holdings and China's Country Style Cooking Restaurant Chain have risen about 50 percent, while business software company SciQuest is up nearly 30 percent.

Financial companies perhaps don't have the same "sex appeal" that Chinese and technology companies are enjoying right now, said David Menlow, the founder of IPO research firm IPO Financial. China is one of the world's fastest-growing economies.

Liberty Mutual had planned to sell 64.3 million shares for $18 to $20 apiece. That would have raised about $1.2 billion in the middle of that range. The biggest IPO in the U.S. so far this year was interactive white-board maker SMART Technologies, which raised $660.1 million in July. Oasis Petroleum raised $588 million in its June 16 debut and $676.2 million including extra shares that underwriters bought later.

Privately held Liberty Mutual Group said it is the fifth-largest property and casualty insurer in the U.S.

Bank of America spokesman John Yiannacopoulos and Citi spokesman Alex Samuelson declined to comment on the delay. Bank of America and Citigroup were the main underwriting banks working on the deal.

Liberty Mutual spokesman John Cusolito also declined to comment. Liberty Mutual Group CEO Edmund Kelly said in a statement that the delay in raising funds would not affect day-to-day operations.

E-mail E-mail article      Print Print      Share Share

More Business & Technology

UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case

UPDATE - 09:32 AM
Bank stocks push indexes higher; oil prices dip

UPDATE - 08:04 AM
Ford CEO Mulally gets $56.5M in stock award

UPDATE - 07:54 AM
Underwater mortgages rise as home prices fall

NEW - 09:43 AM
Warner Bros. to offer movie rentals on Facebook

More Business & Technology headlines...

Comments
No comments have been posted to this article.

advertising


Get home delivery today!

Video

Advertising

AP Video

Entertainment | Top Video | World | Offbeat Video | Sci-Tech

Marketplace

Jaguar to introduce XE sedan; app translates engine soundsnew
(Jaguar) Jaguar to sell XE sedan Jaguar will introduce its XE compact sedan in 2016. It's the first time Jaguar has competed in the largest luxury seg...
Post a comment

Advertising