Axa IPO flop shows investor dismay at firm’s strategy

Bloomberg

Investors gave a resounding thumbs-down to the partial spinoff of Axa SA’s US business, dealing a blow to boss Thomas Buberl’s strategy for the French insurer.
The sale of part of its US operations raised almost $1 billion less than the company had hoped for, and comes amid concern among shareholders at the $15.3 billion takeover of XL Group Ltd. which the IPO will help finance.
“Shareholder frustration with Axa’s CEO is likely only to have increased after the sale,” Bloomberg Intelligence analysts Charles Graham and Jonathan Adams said in a note. The XL acquisition offers “limited synergy benefits, and in our view, increases underwriting risk.”
The buyout is supposed to help Axa shift toward property and casualty insurance just as premiums rise after last year’s hurricanes and California wildfires, and also to reduce its exposure to savings activities in the US.
Yet shareholders were less than enthusiastic about the deal from the start: the Paris-based company fell the most since June 2016 after the announcement in early March, with analysts including Daniel Bischof of Baader Helvea AG complaining about the high price Axa is paying for XL.
An Axa spokesman declined to comment.
Even before the IPO, Axa was this year’s second-worst performer in the Bloomberg Europe 500 Insurance Index, shedding more than 9 percent of its value. Shares showed a muted reaction to the sale, climbing 0.2 percent to 22.39 euros as of 11:43 a.m. in Paris trading.
Axa Equitable Holdings Inc. sold 137.25 million shares at $20 each in the IPO to raise $2.75 billion. That’s well short of the $3.7 billion it was trying to raise at the high end of the $24 to $27 share-price range marketed to investors. The shares are set to begin trading on the New York Stock Exchange under the symbol EQH. Morgan Stanley, JPMorgan Chase & Co., Barclays Plc and
Citigroup Inc. led the offering.
The business, valued by the share sale at $11.2 billion, is made up of the US operations of Europe’s second-largest insurer, including its US Life & Savings unit and a 64 percent stake in money manager AllianceBernstein Holding LP.
A small consolation to Axa Chief Executive Officer Buberl is that the listing of about 20 percent of Axa Equitable Holdings was still the biggest IPO in the US this year.