Shares dip after Gjensidige IPO raises $1.8 billion

By Victoria Klesty

OSLO (BestGrowthStock) – Shares in Norwegian insurer Gjensidige (GJFS.OL: ) traded below the price of the company’s initial public offering to raise some 10.7 billion crowns ($1.77 billion) in Norway’s largest flotation in nearly a decade.

Mutually-owned Gjensidige has floated a 40 percent stake including a 3.7 percent over-allotment option. It priced its shares at 59 Norwegian crowns ($9.76), the mid-point of its latest indicated range of 58-60 crowns.

When the Oslo Stock Exchange opened at 0800 GMT on Friday Gjensidige’s stock first rose to 59.25 crowns but after 45 minutes had fallen to 58 crowns against a flat Oslo benchmark index.

Several analysts said it was too early to judge the market reaction because many Norwegian retail investors might be flipping IPO shares they purchased at a discount.

“You have all these retail investors that received a 10 percent discount, and I wouldn’t be surprised if at least some of them are already taking that as profit,” said Fondsfinans analyst Bengt Kirkoen.

The Gjensidige IPO, the largest in Norway since Statoil’s (STL.OL: ) in 2001, values the company at 29.5 billion crowns.

Denmark’s TDC (TDC.CO: ) on Thursday raised $3.7 billion for its private equity owners through a share buyback in one of Europe’s biggest public offerings of 2010.

The Norwgian property and casualty insurer’s IPO and the share sale by Denmark’s TDC (TDC.CO: ) highlight investor appetite for Scandinavian assets as the region’s economies recover, while the neighboring euro zone is rocked by a debt crises.

Investor interest in IPOs has picked up worldwide in the second half of 2010.

Gjensidige’s equity — fully owned by the Gjensidige Foundation before the offering — had a book value of 22.06 billion crowns at the end of the third quarter. The IPO values it at 1.33 times this amount, a Reuters calculation showed.

Finnish insurer Sampo (SAMAS.HE: ) trades at 1.48 times its third-quarter book value, while Denmark’s Tryg (TRYG.CO: ) trades at close to 1.65 times book value.

Some see the Gjensidige IPO as a way for the firm to pursue mergers and acquisitions, perhaps including a tie-up with Norwegian life insurer Storebrand (STB.OL: ). Gjensidige is Storebrand’s largest shareholder, with a 24.3-percent stake.

(Editing by Will Waterman and Jane Merriman)

Shares dip after Gjensidige IPO raises $1.8 billion