Genworth sells majority stake in Australian mortgage insurance business

The selldown provides the company with a much-needed infusion of funds

Genworth sells majority stake in Australian mortgage insurance business

Genworth Financial is selling 52% of its mortgage insurer Genworth Mortgage Insurance Australia, reportedly in a bid to raise more funds after the collapse of a takeover plan by China Oceanwide Holdings.

China Oceanwide offered to acquire Genworth Financial for US$2.7 billion in 2016, but the deadline has passed without the transaction being completed, and has not been extended despite 16 earlier extensions, according to a report by The Australian. The company had also considered an initial public offering of its US mortgage insurance business.

However, selling the stake in the $1.1 billion Australian operation was reportedly the best way for Genworth to secure much-needed cash, given that Australian house prices rose at the fastest rate in 17 years last month.

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The selldown on Sunday through Goldman Sachs reportedly drew heavy demand from domestic institutional investors, The Australian reported. The transaction will allow Genworth Financial to tap $488.6 million in proceeds.

Along with QBE, Genworth Mortgage Insurance Australia is the largest mortgage insurer in the market.