French insurance company AXA SA said Wednesday it plans to take its large U.S. life-insurance operations public, selling shares in a company that also will be home to the AllianceBernstein Holding L.P. asset-management business.
Paris-based AXA aims to raise billions of dollars in the first half of next year by selling a minority stake in the combined life-insurance and asset-management company.
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The offering caps a tumultuous two weeks for AXA and its U.S. asset-management business. On the last Friday of April, then-AllianceBernstein Chief Executive Peter Kraus was fired along with the majority of the money manager's board of directors. AXA's decision to fire the majority of AllianceBernstein's board marked a rare and abrupt overhaul.
AllianceBernstein, like many active stock- and bond-picking firms, has been hit hard in recent years by the growing popularity of low-cost index-tracking funds.
The combined U.S. life-insurance and asset-management businesses would have about $14 billion to $15 billion in book value, which is assets minus liabilities, according to people familiar with the matter. Most of that is attributable to the life-insurance operations. It is unclear what kind of market capitalization the publicly traded entity would have.
U.S. life insurers' market caps currently range from just below 60% of their book value to 130% or more, while asset-management businesses often are valued at higher levels.
Currently, AXA controls 64% of AllianceBernstein. In the offering, AXA would include a portion of that stake, the people said. The 36% of the asset-management business not controlled by AXA would remain a separate publicly traded entity, the people said.
The planned deal wouldn't result in the issuance of new AllianceBernstein shares, the people said, and the firm will retain its name.
The deal will be complex because AllianceBernstein already has listed shares in the U.S.
The offering also includes AXA Equitable, which sells products to teachers through 403(b) tax-advantaged savings programs, tax-advantaged variable annuities to retirees and other conservative savers, and life insurance. It has a fleet of about 5,000 financial advisers and also sells through banks and brokerage firms.
AXA Equitable is one of America's oldest life insurers, founded in 1859 in New York, and was long known as Equitable Life Assurance Society of the U.S. AXA acquired it in 1992.
The removal of Mr. Kraus and the subsequent IPO filing of part of AXA's stake in AllianceBernstein represent the most significant changes yet at a firm that specializes in traditional stock and bond picking.
Mr. Kraus was hired in December 2008 to steady the firm after significant losses during the financial crisis and, by some measures, did so. He reduced AllianceBernstein's reliance on stockpicking as a main source of revenue and pushed further into fixed income and higher-fee-generation alternative asset classes like hedge funds.
He earned a reputation as a fund executive skeptical of exchange-traded funds. Unlike many rivals, AllianceBernstein opted not to buy or partner with ETF firms.
But AllianceBernstein's share price trailed the S&P 500 during Mr. Kraus's time as chief, and the firm suffered net withdrawals in six out of the eight years of his tenure. The firm managed $497.9 billion in assets as of the end of March.
In April, AXA used its "sole authority" to elect AllianceBernstein board members to make broad changes, opting to replace most of the directors with a new slate of individuals that were directors or officers of AXA or related entities.
AXA Chairman Denis Duverne said at the time that the French insurer wanted to build "an even closer, more strategic relationship" with AllianceBernstein. He provided no additional details other than saying AllianceBernstein would manage additional assets.
Following the IPO, AXA aims to reinvest proceeds from the sale to bolster its global sales of commercial property-casualty insurance, health insurance and some other protection and savings products, the company said.
AXA said it would convert about $1 billion of outstanding debt owed by AXA U.S. into equity ahead of the IPO.
Noemie Bisserbe in Paris contributed to this article.
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(END) Dow Jones Newswires
May 10, 2017 02:16 ET (06:16 GMT)