Axa's $15.3 billion takeover of global property casualty firm XL Group was a monster deal in the insurance world, but Paris-based Axa's plan to pay for the acquisition has come up short.
The French company is selling its U.S. business, Axa Equitable Holdings, in an initial public offering. But the money it raised was about $1 billion less than the goal.
The IPO priced at $20 a share, below the expected $24 to $27 per share range. It opened trading at $19.75 on Thursday at the New York Stock Exchange under the ticker symbol EQH. It closed at $20.34, up 1.7 percent.
At $2.75 billion in proceeds, the deal is still the largest U.S. IPO of the year, according to Renaissance Capital. But it was far less than the $3.7 billion it had expected to raise at the high end of the pricing range.
Insurers have been a beaten-down sector this year. Principal Financial shares are down more than 17 percent, while shares of Prudential Financial and Lincoln National are both down more than 12 percent, and shares of MetLife have fallen 7.7 percent.
Axa Equitable begins trading in that difficult environment and at a time when the parent company Axa was counting on the proceeds from the IPO, two factors that put pressure on the opening price, said Kathleen Smith, principal at Renaissance and manager of IPO ETFs.
"Investors realized the deal needed to get done," Smith told CNBC on Thursday. "They had the upper hand."
Morgan Stanley and J.P. Morgan Chase led the IPO.