UPDATE 4-Delta Lloyd IPO falls flat as banks seek cash

* Offering totals 1 bln euros, or 63.5 mln existing shares

* Aviva will receive net proceeds of about 1 bln euros

* Shares down 3.2 pct at 15.49 euros vs 16 euros offer price

(Adds fund manager comment, updates shares)

By Gilbert Kreijger

AMSTERDAM, Nov 3 (Reuters) - Dutch insurer Delta Lloyd's (DLL.AS) initial public offering, western Europe's largest this year, fell flat on Tuesday, reflecting increased competition for capital in Europe where banks are seeking billions of euros.

Delta Lloyd shares, whose offer price of 16 euros was at the low end of a previously expected range of 15.5 to 19 euros, were down 3.2 percent at 15.49 euros by 1416 GMT, in a lacklustre debut which failed to offer fresh inspiration for Europe's relatively downbeat IPO scene.

The IPO raised net proceeds of around 995 million euros ($1.5 billion) for Delta Lloyd's British parent Aviva (AV.L), which sold almost 39 percent of its stake in the insurer, or 63.5 million shares, to free up capital and potentially make acquisitions. [ID:nLJ701798]

The offering is western Europe's biggest this year, while across the whole of Europe it is outweighed only by Polish energy company PGE, which is raising 6 billion zlotys ($2.04 billion) in a share offering and is due to make its market debut on Friday. [ID:nL2402970]