Genworth Falls After Delaying Mortgage IPO on Volatility
MAY 13, 2021 | REPUBLISHED BY LIT: MAY 14, 2021
Genworth Financial Inc. shares declined after the company postponed a planned initial public offering for its Enact Holdings Inc. unit, citing volatility in the mortgage-insurance market.
The IPO, which was expected to raise as much as $623 million, would have been this week’s largest U.S. initial offering. Genworth dropped as much as 5.2% in New York before rebounding to $3.86 at 1:08 p.m., a 0.3% increase.
The decision to put the sale on hold follows last month’s collapse of a takeover agreement Genworth had reached with China Oceanwide Holdings Group Co. Taking the mortgage-insurance business public was initially floated as part of a plan to help pay near-term debt as progress on the merger dragged on for more than four years.
“Genworth does ultimately need the cash,”
Jeffrey Flynn, an analyst with Bloomberg Intelligence, said in an email.
“So there is some pressure on them to get it done.”
But Flynn said the company’s cash position is “workable,” and a delay might ultimately help if an improving housing market boosts second-quarter results at Enact.