Blue Capital Management, the third-party capital and reinsurance-linked fund management arm of Bermuda based reinsurer Montpelier Re, has been raising new funds for its flagship listed catastrophe reinsurance and retrocessional linked investment fund Blue Capital Global Reinsurance Fund Limited. The fund launched a prospectus in April for the first of a series of placing’s of new shares in the fund to accommodate new investor capital inflows.
Today’s announcement of the successful completion of that placement is the first step forwards for Blue Capital since it launched. Reinsurer Montpelier Re seeded Blue Capital with $50m when it launched the Blue Capital Global Reinsurance Fund last year, with third-party investments bringing the funds overall size to $100.1m at launch.
The announcement signals the successful First Closing under the Placing Programme which it initiated on 16 April 2013. The fund will issue an aggregate of 51,250,000 new Ordinary shares at a price of US$1.02 per share, so raising $52.275m in new capital.
Now, with the addition of this $52.275m from its first placement in this new capital raising push, the Blue Capital Global Reinsurance Fund has raised approximately $152.38m in total. Having deployed around $66.9m of its initial capital already, largely at the January renewals, it now has somewhere around $85.5m of capacity available to deploy at the upcoming mid-year reinsurance renewals, should it so choose.
The new capital will be used to invest in a diversified portfolio of fully collateralised reinsurance-linked contracts and other investments exposed to insured catastrophe event risks, according to today’s release. Blue Capital Global Reinsurance Funds investments are made via a segregated account of Blue Water Master Fund Ltd. Blue Capital anticipates that the majority of this new injection of capital, together with the remaining balance from the funds launch, will be invested in the June and July 2013 reinsurance renewals.
Discussing the successful raising of this new capital and closing of this first placement of new shares, William (Bill) Pollett, President and CEO of Blue Capital said; “We are delighted to have attracted such a strong level of support from a broad range of new and existing high quality investors. We believe the First Closing provides the Company with a strong platform for further growth and we anticipate taking full advantage of the Placing Programme for further fundraising opportunities over the next twelve months.”
We asked Bill Pollett for some further thoughts on the completion of this first successful capital raise and placement.
Commenting on the investors involved in this latest placement of shares, Pollett said; “Interest was very strong and demand exceeded our expectation this early on. It has significantly broadened our investor base with the addition of highly quality multi-asset institutional and wealth management investors, providing an excellent base for future raises.”
Asked when he felt Blue Capital would return to the capital markets to try to raise my capital through another share placement, Bill Pollett responded; “We’re likely to be back later in the year with another offering on the placement agreement which is good for 12 months. We’re on target to build this into a significant fund (greater than $300 million) over next few years.”
Bill Pollett said that investors expressed a liking for the Blue Capital platform and infrastructure; “Key Blue capital advantages are that, by leveraging Montpelier’s industry-leading proprietary systems, underwriting expertise, and deep broker and client relationships, Blue Capital differentiates itself by providing investors access to the entire catastrophe reinsurance market. Our target focus is on the smaller regional insurance companies who do not typically trade with ILS funds as they value the long-term relationships and the traditional underwriting approach that Blue Capital brings to the table. They also know we will pay claims on time and support them when they need us most, after the next big loss event.”
Blue Capital will now apply to have the 51,250,000 Ordinary Shares admitted to trading on the London Stock Exchange’s Specialist Fund Market and on the Bermuda Stock Exchange (“BSX”). It expects that the shares will be admitted to trading at 8.00 a.m. on 9 May 2013. Following Admission, the total number of Ordinary Shares in issue will be 151,350,000.
The Blue Capital Global Reinsurance Fund’s share price closed yesterday at $1.02, so with the total shares in the fund leaping to 151,350,000 the fund is now approximately $154.38m in size at that share price.
Jefferies International Limited is acting as financial adviser and bookrunner in relation to the Blue Capital’s Placing Programme.
Blue Capital will see this first capital raise since its launch as highly successful, having grown the size of its fund by 50%. It puts the fund in a great position as we move towards the mid-year renewals with a decent amount of capital to deploy into reinsurance and retrocessional transactions which offer an attractive return.