Sole bookrunner Bank of America backstopped Tuesday night’s £440m clean-up trade for Swiss Re in UK life insurance business Phoenix Group, as was the case with Morgan Stanley for the Cerberus sell-downs on Monday night in Commerzbank and Deutsche Bank.
There was no auction for Phoenix Group.
Bankers have said that investors will be selective around accelerated trades, with a focus on value and reflationary stocks rather than growth names. “Financials are really in vogue right now,” said one head of syndicate.
Sentiment in Phoenix was bolstered by news on Tuesday that the company had completed £4bn of bulk purchase annuity transactions in the second half of 2021, with the group now expected to deliver more than £1bn of new business long-term cash generation for 2021. The stock closed up 2.3% on Tuesday.
An offering of 66m shares, representing 6.6% of the company and around 30 days’ trading, launched shortly after 5pm in London with guidance of 660p to the 685p market close, with coverage following after around 20 minutes.
The earlier Commerzbank and Deutsche trades had only accounted for one or two days' trading and investors appreciated that size in a liquid stock. The much chunkier size of Phoenix was the source of some pushback.
Despite that, pricing came off the bottom at 664p for a 3.1% discount and books closed at 7pm. The top 15 orders took two-thirds from a book that was heavily supported by long-only money.
On Wednesday, Phoenix shares fared well and were above the previous close for a time before ending the day flat at 685p, allowing ABB buyers to chalk up a 3.2% profit.
Swiss Re carried out an identical trade – 66.2m shares and 6.6% of share capital – in June when it halved the stake resulting from Swiss Re's sale of ReAssure to Phoenix in 2020. That ABB totalled £437m and priced at 660p through joint bookrunners Bank of America, Citigroup and HSBC.