Athene Trades Higher in Market Debut
December 09 2016 - 11:50AM
Dow Jones News
Athene Holding Ltd. shares traded higher in their market debut,
as the provider of fixed-annuities further gives the lethargic
market for initial public offerings a lift late in the year.
Athene shares opened at $43.56, above its IPO price of $40.
Shortly after the open, the stock traded as high as $44.62 before
retreating recently to $43.86.
Athene is one of the top sellers of U.S. fixed annuities by
dollars sold, according to industry-funded research firm Limra,
after a series of acquisitions of fixed-annuities businesses in
recent years. The insurer, backed by private-equity firm Apollo
Global Management LLC, guarantees steady payments to millions of
retirees and other consumers through savings contracts that promise
to pay buyers a set amount of interest each year.
The selling shareholders of Athene raised $1.1 billion in an IPO
late Thursday, according to people familiar with the matter. That
makes Athene the second-biggest U.S.-listed company to debut in
2016, according to Dealogic.
Athene's shares priced at $40 apiece and 27 million shares were
sold, according to people familiar with the offering. The company
expected to sell 23.75 million shares at between $38 to $42 a
share. Shares are trading on the New York Stock Exchange under the
symbol ATH.
A successful debut could set the stage for a revitalized IPO
market in 2017, some bankers and analysts said. The pipeline for
new offerings in the coming months includes Travel BV, which plans
to change its name to Trivago, and Snapchat parent Snap Inc. How a
big IPO like Bermuda-based Athene prices and trades in its debut
often serves as a litmus test for companies waiting in the wings to
go public.
The deal comes at the end of what is on track to be the slowest
year for U.S.-listed IPOs by money raised since 2003 even if Athene
is added to the tally, according to Dealogic. The biggest IPO of
the year so far was ZTO Express Inc., which raised $1.4 billion in
an October deal that valued the Shanghai-based logistics company at
roughly $14 billion, Dealogic data show.
Meanwhile, the outlook has brightened for the financial-services
sector, potentially boosting investor interest in the annuities
provider, some analysts and money managers said.
Financial companies in the S&P 500 are up 18% since the U.S.
presidential election, on investors' expectations of loosened
regulation and higher interest rates under President-elect Donald
Trump. The broader S&P 500 index has risen 5% in that time.
Last spring, the Labor Department issued a new regulation that
toughens standards for financial advisers recommending certain
insurance-company products, including some annuities, to retirement
savers. While Mr. Trump hasn't directly addressed the fiduciary
rules, one of his top advisers has said publicly that they should
be repealed.
As Athene pitched its IPO to potential investors at the Ritz
Carlton in Boston this month, management acknowledged, but also
played down, the potentially adverse impact of the fiduciary rules,
according to one person in attendance.
Athene's fast growth as it scooped up fixed-annuity businesses
helped spur a regulatory debate about whether private-equity firms
and other nontraditional buyers of annuity-focused insurers might
be taking excessive risks in pursuit of profits.
Apollo earns fees overseeing credit, real estate and other
investments that back Athene's annuity products. Apollo affiliates
raked in $268 million in asset-management and other fees related to
Athene last year, according to regulatory filings.
Doug Butler, research director at Rockland Trust, said the
relationship doesn't deter him from considering buying into the
deal and, if anything, could be a potential positive.
Athene had said the company itself wouldn't receive any of the
proceeds from the public sale of stock. Rather, the IPO stands to
benefit executives at the buyout firm who own shares.
"Apollo does not need Athene to be successful, but it certainly
helps," Mr. Butler said.
Athene's IPO was led by Goldman Sachs Group Inc., Barclays PLC,
Citigroup Inc. and Wells Fargo & Co.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
December 09, 2016 11:35 ET (16:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Sep 2023 to Sep 2024