Investment manager Dexion Capital’s is moving forwards with their plans to raise additional funds for the DCG Iris Ltd. insurance-linked security fund with the publication of a new prospectus and notification of their intention to list 11.025m additional shares valued at £1 each. The successful listing of the additional shares, expected to be admitted on the 20th December, will bring the total size of the DCG Iris ILS fund to just over £51m.
Back in November Dexion Capital postponed a share offering as the firm got to grips with the potential exposure that the DCG Iris fund has to losses from hurricane Sandy. DCG Iris acts as a feeder fund and invests all of its capital assets in Credit Suisse’s CS IRIS Low Volatility Plus Fund, which predominantly invests in catastrophe reinsurance contracts, catastrophe bonds and instruments such as ILW’s. As such some exposure to hurricane Sandy was likely, so Dexion Capital withdrew the proposed offering while the situation became a little clearer.
Credit Suisse implemented side pockets for the fund which acts as a master fund for DCG Iris, segregating the Sandy exposed portion away from the rest of the investments. With this new share offering that Dexion Capital have proposed for DCG Iris, they are going to achieve something similar for their new investors by offering the shares in a different class.
The notification of intention to list shares is for 11.025m £1 Sterling C Shares. DCG Iris already has just over 40.1m Ordinary Shares. By offering this new injection of capital as C Shares it means that the new capital commitments to the fund will not have any exposure to losses from Sandy.
The additional capital injection will take DCG Iris from the approximately £40.1m they launched with to just over £51.17m in total share capital. Dexion Capital are still targeting to increase share capital to around £150m by mid-2013, the new prospectus they published last Friday allows for up to 500m more shares to be issued, giving them plenty of room to increase that if fund-raising proved more successful.
A spokesperson for DCG Iris Ltd. told us that once the impact from hurricane Sandy is fully understood they will convert the C Shares into Ordinary Shares and merge them back into the main share allocation.