Blue Capital Management, the third-party capital and reinsurance-linked fund management arm of Bermuda based reinsurer Montpelier Re, has a proposed placing of new shares in its flagship listed reinsurance-linked investment fund, the Blue Capital Global Reinsurance Fund Limited.
The fund which launched and was admitted for trading in December 2012, is currently around $153m in size after a launch placement of $101.1m of shares followed by a second placement of another $52.3m of shares.
As part of a placing programme launched in April 2013 this new offering will constitute the second placement of that programme. Blue Capital has deployed 97% of its assets in the first-half of this year, largely into collateralized catastrophe reinsurance contracts and this new share placing will see it raising more capital in time for the next major reinsurance renewals in January.
Raising more capital will allow Blue Capital to put out larger lines and grow its portfolio, which in turn will help to lift its net asset value while continuing to target its LIBOR plus 6% per annum on the Issue Price of the Ordinary Shares and a net return to Shareholders (comprised of dividends and other distributions to Shareholders together with increases in the Company’s Net Asset Value) of LIBOR plus 10% over the longer term.
It will be interesting to see how much additional capital the firm can attract at this time when interest in catastrophe reinsurance-linked investments is seemingly at an all time high. Give Blue Capital’s focus on collateralized reinsurance contracts and its support from a large and respected reinsurer, we could see the fund receive another large boost taking it to $200m or more in assets under management.
Blue Capital hopes to close this new placing in October of this year. We’ll update you when the results of this share placement are announced in the coming weeks or if any further details are made available.