Genworth Australia Mortgage Unit Rises 13% in Trading Debut

May 20, 2014 2:50 am ET

(Updates with closing share price in second paragraph.)

May 20 (Bloomberg) -- Genworth Financial Inc.’s Australian unit, which raised A$583 million ($542 million) in the country’s biggest initial public offering this year, rose 13 percent in its first day of trading.

Shares of Sydney-based Genworth Mortgage Insurance Australia Ltd. climbed to A$3 at the close of trading on the Australian Securities Exchange in Sydney compared with A$2.65 that investors paid for the stock in the IPO. The benchmark S&P/ASX 200 Index rose 0.2 percent. Genworth Financial closed 0.6 percent lower at $17.54 yesterday in New York.

Genworth Australia’s opening may further boost new share offerings in the country, where A$2 billion has been raised this year, compared with A$841 million for the same period of 2013, according to data compiled by Bloomberg. Australian companies that listed this year have gained 12.8 percent to yesterday, according to the data.

Spotless Group Ltd., a Melbourne-based cleaning and catering contractor, plans to raise A$1 billion in a listing later this month. That would be the largest Australian IPO since rail operator Aurizon Ltd.’s A$4.6 billion offering in 2010. The transactions build on the A$6.3 billion raised by Australian companies through IPOs in 2013, the most since 2010, according to Bloomberg compiled data.

Genworth Financial expects to receive gross proceeds of about $535 million from the offering, based on an assumed exchange rate of $0.92 per Australian dollar, according to a May 15 statement. Offering fees and expenses will probably be $30 million, Genworth Financial said.

Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs. Genworth Financial mainly offers the coverage in Australia, the U.S. and Canada.

Genworth Financial sold a minority stake in its Canadian mortgage insurer in 2009, raising more than $700 million.