Cohen & Co. to raise $235m with third Butler-led re/insurance SPAC vehicle

Fixed income financial services focused investment firm Cohen & Company, LLC has begun a capital raise for what will be its third insurance, reinsurance and insurtech focused Special Purpose Acquisition Company, or SPAC, named INSU Acquisition Corp. III.

As with its previous two insurance and reinsurance focused Special Purpose Acquisition Company (SPAC) ventures, Cohen & Co’s latest investment vehicle counts John Butler, formerly a Managing Partner at insurance-linked securities (ILS) investment specialist Twelve Capital and who joined Cohen & Co. in 2017, as its President and CEO.

Cohen & Co has been active in the SPAC space for some time and launched its first SPAC vehicle with an insurance, reinsurance and insurtech remit in early 2019.

Insurance Acquisition Corp. (IAC), as the first SPAC was called, eventually raised almost $151 million and then entered into a combination transaction with automotive e-commerce firm, Shift Technologies Inc.

This was followed up quickly with INSU Acquisition Corp. II around the middle of 2020, with that second insurance and reinsurance focused SPAC vehicle eventually raising $230 million including exercised over-allotment options.

The second re/insurance SPAC from Cohen & Co. entered into a high-profile combination with insurtech Metromile, taking the company public in the process in a deal that gave Metromile a pro forma enterprise value at closing of $956 million and a pro-forma market cap of $1.3 billion.

After that high-profile success, it’s perhaps no surprise to see Cohen & Co. back so quickly to raise a third re/insurance SPAC vehicle, to continue its activities in this space.

INSU Acquisition Corp. III is expecting to make a $200 million public offering of shares, which with over-allotments could reach $230 million.

A further $5.4 million could be raised in a private share placement as well, taking the total target capital raise to $235.4 million.

After the capital raise is complete, the so-called blank check company will look to effect an acquisition, merger or other deal, taking that company public in the process.

The target is again insurance and reinsurance related service companies, including re/insurers as well as insurance technology start-ups (insurtech’s).

Cohen & Co. will look to tap into its operational expertise to assist in the acquisition of any target company, including in helping such targets access reinsurance and insurance-linked securities (ILS) capacity to gain access to more efficient capital.

The shares eventually issued by INSU Acquisition Corp. III are expected to be listed on the Nasdaq Capital Market under the symbol “IIIIU”.

These special purpose acquisition companies, or blank check investment vehicles, have become an increasingly attractive prospect for investors right now, giving them a way to back investment managers with specific sector expertise on as-yet unknown acquisitions and combinations, but that have the potential to deliver significant returns on their investments.

The listing makes the investment even more compelling for some investors, given the potential liquidity options it provides going forwards and the chance to take companies public.

Given the firm’s track-record and insurance, reinsurance, ILS and insurtech investing focus, plus experienced management team, Cohen & Co’s third re/insurance SPAC vehicle is almost certain to receive significant demand from investors, especially given the last successful combination with Metromile and the fact the insurance and reinsurance market looks increasingly attractive to investors at this time.