(AV-.L) Aviva PLC Buy/Sell

By Gilbert Kreijger

AMSTERDAM, Nov 3 (Reuters) - Dutch insurer Delta Lloyd's initial public offering, western Europe's largest this year, fell flat on Tuesday, reflecting increased competition for capital in Europe where banks are seeking billions of euros.
Delta Lloyd shares, whose offer price of 16 euros was at the low end of a previously expected range of 15.5 to 19 euros, were down 3.2 percent at 15.49 euros by 1416 GMT, in a lacklustre debut which failed to offer fresh inspiration for Europe's relatively downbeat IPO scene.
The IPO raised net proceeds of around 995 million euros ($1.5 billion) for Delta Lloyd's British parent Aviva, which sold almost 39 percent of its stake in the insurer, or 63.5 million shares, to free up capital and potentially make acquisitions.
The offering is western Europe's biggest this year, while across the whole of Europe it is outweighed only by Polish energy company PGE, which is raising 6 billion zlotys ($2.04 billion) in a share offering and is due to make its market debut on Friday.
Analysts and fund managers stopped short of saying Delta Lloyd's IPO would cast doubt on other companies with IPO plans in Europe.
"It's less good than it could have been, but it's not something to sneer at. All financials are under pressure today and Delta Lloyd's fall is in line with the market," said Corne van Zeijl, fund manager at SNS Asset Management.
The DJ European insurers index fell 1.9 percent, having dropped more than 10 percent since Oct. 19 as the prospect of state-aided bank breakups hit financials and reflecting general concerns that stocks may have rallied ahead of the recovery.

IPO activity is greater outside Europe -- five of the 10 largest IPOs this year have been by Chinese companies and other emerging markets have also been relatively busy. The biggest IPO has been by Banco Santander Brasil.
In Europe, Italian online fashion retailer Yoox, Belgian drugmaker Movetis, Poland's utility Tauron and insurer PZU are among companies to seek a listing this year or in 2010.
"The market for new capital has become more competitive. You can also see that it is easier to raise money in emerging markets, where you can say that you're raising money to finance growth. That is less the case for the United States and Europe," said Robeco fund manager Mark Glazener.
Banks especially are crying out for cash. British state-backed lender Lloyds Banking Group Plc set a record 13.5 billion sterling rights issue, while Dutch bancassurer ING Group NV wants to raise 7.5 billion euros.
Delta Lloyd Chief Executive Niek Hoek told reporters he had not experienced competition from bank rights issues and was not worried about the stock's fall, saying its investors were focused on long-term returns.
Books were twice oversubscribed, he said.
"One of the problems with IPOs is that they tend to happen at the top of the market when a hype is created. That can create disappointment," Hoek said. "This is a good level to buy into the shares."
The IPO of Delta Lloyd, the Netherlands' fourth-largest life and property insurer based on 2008 gross premium income, was managed by Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, JP Morgan and RBS Hoare Govett Ltd.

(Additional reporting by Daisy Ku in London; Editing by Hans Peters and David Holmes)

($1=.6769 euros)

($1=2.944 Zloty) Keywords: DELTALLOYD/ (gilbert.kreijger@thomsonreuters.com; +31 20 5045007; Reuters Messaging: gilbert.kreijger.reuters.com@reuters.net)

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