Línea Directa has brought back the appetite of investors. The red confetti cannons used at its premiere yesterday on the Madrid Stock Exchange augured a historic premiere and it was so. The increase on its first day as a listed company reached 23.07%, up to 1.62 euros per share, compared to the 1.318 euros at which the starting price had been set.
The insurer started with a valuation of 1,434 million euros, which increased by 331 million euros yesterday. Línea Directa has become the best stock market opening among the large firms of the Spanish Continuum since 2013, when Liberbank rose 30%. Overall, including small IPOs and listings, it is the seventh best since 2000 after Gamesa with more than 70%, Berkeley’s 52% in 2018 (very small capitalization), Oryzon’s listings in 2015 with 35.7%, from Liberbank, with 30%, Clínica Baviera, in 2007, with 27.7%, and that it put its first foot on the floor and scored gains of more than 25.3 % on the first day as listed.
The well-known ‘Allow me to insist’ in the insurer’s advertisements has become a motto since Bankinter announced the spin-off of Línea Directa at the end of 2019. Then the pandemic would come, truncating the plans for its stock market launch. Finally, after yesterday’s bell, Línea Directa, focused on its efforts to step onto the stock market, has become the first IPO of 2021, a year that is expected to be prolific in terms of IPOs and IPOs in Spain, and It is the firm with the largest capitalization that has reached the Continuous Market since February 2018. Since then, Spain has gone one exit per year: the first, in 2019, at the hands of Solarpack; the second, in 2020, with Soltec.
Three controlling shareholders
41% of the capital of Línea Directa is in the hands of three large shareholders: Cartival, the investment arm of the Botín family, with 19.15% according to the placement brochure, Bankinter, which maintains its share of 17.4%, and Fernando Masaveu, with control of 4.37%. It should be remembered that the IPO of Línea Directa has been articulated through a listing, according to which the entity that directs would have distributed at the rate of 1 Bankinter share for a new one of the insurer among the bank’s shareholders at a price of 1,318 euros, and the shareholding was the same in both companies.
Línea Directa launched at a price of 1.318 euros per share, the result of dividing its valuation (1,434 million euros) by the number of shares, which amounts to 1,088 million. The company has, like Bankinter, a total of 56,610 shareholders.
After the bell, the titles have registered a rise of up to 33.5%, touching a maximum price of 1.76 euros, according to Bloomberg. Bankinter, for its part, has reduced its capitalization by the corresponding 1,434 million euros, bringing its stock market value to 4,102 million euros after rising 4.29% in the session.
“It is early to make an assessment. What we all thought is that Línea Directa was worth more than the 1,434 million that the experts estimated,” Miguel Ángel Merino, CEO of Línea Directa, assured yesterday before making the touch of honor on the parquet of the Madrid Stock Exchange.
After yesterday’s rise of 23%, the value of Bankinter’s stake has increased by 57.6 million euros, up to 307 million. Jaime Botín entered another 63.3 million at the premiere alone and his part of the cake has a stock market valuation of 338 million, compared to the initial 275. Fernando Masaveu, historical shareholder of the Spanish stock market and proprietary director of Línea Directa, manages to hoard a stake of 77 million euros after the best stock market debut of almost the 20th century.
The dividend as a priority
Carlos Rodríguez, financial director of the insurer, has insisted on the profile of Línea Directa as a company. “The IPO allows us greater autonomy, to decide or adjust the dividend policy,” acknowledged the manager during the press conference held on the Stock Exchange this Thursday. According to company data, since 2009 Línea Directa has distributed dividends for an amount of 1,207 million euros among its shareholders.
Although the company has promised to distribute at least 70% of its profit by way of dividend, the truth is that Rodríguez once again emphasized yesterday the fact that the average in recent years is closer to 90%, compared to the average of national comparables at 40% (Mapfre and Catalana Occidente). In this way, the insurer aspires to lead shareholder remuneration in the sector, which calls into question Mapfre’s future leadership in terms of dividends. Analysts expect the profitability of the largest listed Spanish insurer to be close to 7.5% this year. Línea Directa, in any case, has not clarified whether the first of the payments will be distributed from 2021.
The short-term objective for Línea Directa is to “continue to grow above the market average”, Rodríguez has maintained, as has been done in recent years. The Línea Directa data reflects a growth in net premiums from 2018 to 2020 of 4% for that period compared to the 3% drop in the sector average. Línea Directa obtained a historic profit of 180 million euros in 2020.