MADRID, Dec 19 (Reuters) - Spain’s Bankinter plans to spin off and list next year more than 80% of its insurance business Linea Directa Aseguradora (LDA) in a move that could end the drought in flotations on Spanish markets since the end of 2018.
Investors have shied away from Spain’s domestic initial public offering (IPO) market this year partly in response to the uncertainty created by the country’s two inconclusive elections. .
Though Spanish renewable energy group Grenergy made an upbeat debut on Madrid’s main market on Madrid on Monday, its shares had already been listed on the smaller Spanish Alternative Market (MAB) since 2015.
The last flotation in Spain before Grenergy was the solar energy company Solarpack in December 2018, reaching then a total market value of 266 million euros ($293 million).
On Wednesday, Bankinter, Spain’s fifth biggest bank by market value, said it would divest an 82.6% stake in LDA by distributing the shares to its own stockholders, valuing the stake at 1.184 billion euros and all of LDA at 1.434 billion.
The bank said it would keep a minority shareholding of 17.4% of the insurer on its books.
“The ‘benefit’ is that the transaction shines a light on the value of LDA but it remains to be seen whether the market agrees with the ‘expert’ valuation, while a rush to ‘crystalise’ such value could create an overhang on the newly-listed LDA,” analysts at broker Jefferies said in a note to clients.
Bankinter shares showed little reaction to the plan on Thursday. At 1020 GMT, they were down 0.2% at 6.63 euros.
Before the transaction, LDA will pay Bankinter a 60-million-euro dividend
The bank expects LDA, which accounts for around a fifth of both its profit and revenues, to be admitted to trading on the stock exchange in the second half of 2020.
The bank also expects the deal to have a limited impact on group profitability, boosting its consolidated CET1 capital ratio by just five basis points.
$1 = 0.9073 euros Reporting by Jesús Aguado, Editing by Jose Elias Rodriguez and Mark Potter