Challenge:
During the financial crisis, Genworth Financial was under duress with multiple mortgage insurance businesses straining liquidity following the housing market collapse. The financial pressure was exacerbated by other stakeholders including rating agencies and struggling banks and effectively frozen capital markets. With limited options to raise capital, the Corporate Development team, led by Wall & Main principals, recommended a challenging transaction – pursuing an IPO of its healthier Canadian Mortgage Insurance business in the midst of the crisis. Notwithstanding skepticism from the management team and Board, the company pursued the transaction with limited options, trusting the Corporate Development team.
Deliverables:
The plan to IPO the Canadian business was a sprawling project, requiring coordination among multiple 3rd parties. Principals of Wall & Main led the effort in a crisis posture. The team met with Canadian and US investment banks to plot a course to a flotation. The deliverables included generating a registration statement and all the requisite intercompany agreements that would create the ability to tap the capital markets. In addition, Wall & Main principals addressed key financing issues, including valuation and the size of the offering. The project was one of the larger IPOs at the time, to be executed in a precarious market.
Results:
Although the feasibility was challenged by multiple parties and the prospects were unknown as the team embarked on the IPO effort, the transaction was ultimately consummated. Genworth MI Canada, Inc (MIC) was a new public company, with the Wall & Main team completing an $850MM IPO. The Corporate Development principals delivered on their recommendation and the parent company raised critical capital. As a result, Genworth’s stock price rose from $0.84 in March 2009 to over $7 after the IPO was announced in June 2009, as Genworth demonstrated to the market its ability to navigate through the financial crisis. Further, it cemented Genworth and its Corporate Development professionals as an organization that could execute large transactions and meet their obligations. The MIC offering was a success generated by a creative vision and executed with hard work and grit through a turbulent market environment, generating a dramatic impact on a global organization.