AXA Prices IPO of U.S. Division to Help with XL Takeover

French insurer AXA on Thursday priced the forthcoming initial public offering (IPO) of its U.S. division at $24-27 per share, in a deal that could value the part of the business being listed on the market at $3.5 billion.

AXA said in a regulatory filing that it would offer 137.25 million shares in its U.S arm AXA Equitable Holdings Inc. at $25.50, with that price representing the mid-point in the indicative price range of the IPO.

AXA also announced the launch of around $750 million bonds, mandatorily exchangeable into AXA Equitable Holdings shares.

AXA Equitable Holdings is one of America’s oldest life insurers, with roots going back to 1859 in New York. AXA acquired the business in 1992 and it is targeting a second-quarter IPO of its U.S. division.

The flotation, in which AXA is listing roughly a quarter of its U.S. division, could value the full 100 percent of the U.S. entity at roughly $14 billion.

AXA, which is Europe’s second-biggest insurer by market capitalisation behind Allianz, has said that the proceeds from its IPO deal will help finance its earlier acquisition of insurer XL Group.

“Thus, with XL financing increasingly secure, we expect this to de-risk AXA’s stock,” wrote analysts at brokerage Jefferies. Jefferies kept a “buy” rating on AXA shares.

AXA announced its $15 billion acquisition of XL in March to create a world leader in property and casualty insurance.

Insurers have been turning to takeovers to strengthen their businesses as they face tougher regulation and falling returns from financial market investments, with American International Group also buying reinsurer Validus for around $5.6 billion earlier this year.

Morgan Stanley, JP Morgan, Barclays and Citigroup are the main investment banks involved in the IPO of AXA’s U.S. business.

(Reporting by Matthieu Protard; Additional reporting by Alan Charlish Editing by Sudip Kar-Gupta)