NU Online News Service, May 25, 2004, 3:58 p.m. EDT – Interest rate fears cast a shadow Tuesday on efforts by General Electric Company to cash in on its life insurance and mortgage operations.[@@]
The Fairfield, Conn., conglomerate appears to be on track to raise about $4 billion by selling a 30% stake in the newly created Genworth Financial Inc. unit through offerings of common stock and other securities.
Morgan Stanley & Company Inc., New York, and Goldman Sachs Group Inc., New York, the companies managing the offerings, decided late Monday to ask for just $19.50 per share for Genworth common stock. Earlier, General Electric had suggested the shares might sell for as much as $23.
The current inventory includes $100 million in preferred stock; $600 million in “equity units” that combine a stake in senior notes with rights to buy common stock in 2007; and about 168 million shares of common stock.
The $19.50 IPO common share price has cut the maximum proceeds from the sale of common shares to $3.3 billion. If the price were $23, the maximum proceeds from the sale of common shares would have been more than $3.8 billion and the maximum proceeds from all of the securities offerings would have been more than $4.5 billion.
The common shares now are trading on the New York Stock Exchange today under the symbol GNW. The price of the shares fell slightly Tuesday, then crept back up to end the day at $19.50.
Genworth has absorbed the units of GE Financial Assurance Holdings that sell products such as life insurance, long term care insurance, group life insurance, group health insurance and annuities. It also took General Electric’s U.S. and international mortgage insurance operations, a European payment protection insurance program, a Bermuda reinsurer and a mortgage contract underwriting operation.
General Electric says it will be using the proceeds from the securities offerings to expand its own operations. Genworth will not be getting any of the offering proceeds, according to documents filed with the U.S. Securities and Exchange Commission.
General Electric plans to sell another 30% stake in Genworth in 2005 and more Genworth stock in later years.