Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

DCG Iris grows listed ILS fund by £7.7m in latest placement


The DCG Iris insurance-linked securities fund, marketed and operated by Dexion Capital with Credit Suisse providing ILS asset management and listed on the London Stock Exchange, is now just under £7.7m larger after the completion of its latest share placement.

The latest share offering closed today and the shares placed with investors are now only subject to admission for listing on the exchange. DCG Iris sold 7,657,838 shares at a price of 100.54 pence. That’s slightly above the price DCG Iris shares are currently trading at today (99.85p).

The offering has raised DCG Iris in terms of assets by just shy of an additional £7.7m. This takes the funds market capitalisation to approximately £68.78m at todays share price.

The capital raise has increased the size of DCG Iris by around 12%, so not insignificant. However, in light of the success other capital raises have had of late, and the size other London listed insurance-linked funds have achieved, the fact DCG Iris has not yet been able to stimulate substantial growth in its assets does begin to look a little unusual.

The fund recently survived a continuation vote, largely triggered by its inability to reach a mandated target of having £150m of assets under its management. After this latest share placement and capital raise, DCG Iris still remains a long way off that first target it had set itself. That continuation trigger was reduced recently to £50m, meaning that the fund will not face another while its assets remain where they are today.

The long-term plan for DCG Iris has to be to grow further, it is currently the smallest of the London-listed insurance and reinsurance-linked funds, with no real reason to be Artemis believes. It acts as a feeder fund into a Credit Suisse low volatility ILS fund, so the management of insurance-linked assets is performed by a highly respected management team at Credit Suisse. It offers an attractive return and has traded ok to date.

You have to begin to wonder whether the fund is being marketed to the right types of investors, given that other ILS funds have had no difficulty raising capital. DCG Iris would, you would imagine, suit more conservative pension funds looking for a way into the ILS space with all the liquidity a stock exchange listed share gives.

Still, despite the small size again of the capital raise, DCG Iris continues to make progress and will likely continue to make incremental increases to its size through new share offerings. It still offers something lower volatility and stock exchange listed that has few comparisons in the sector and maybe it is just a matter of finding the right investor audience to help it grow its assets more meaningfully.

Here’s the history of DCG Iris’ capital raisisng efforts:

DCG Iris added just under £1.18m in July, just over £9m in a share offering which closed in May and £11m last December. It launched in June 2012 when it raised £40.1m in its initial share offering.

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