Kairos Acquisition Corp., the Hudson Structured Capital Management Ltd. backed insurance, reinsurance and insurtech focused Special Purpose Acquisition Company (SPAC), or blank check company, maximised the size of its capital raise, securing $276 million to put towards an acquisition or combination.
Back in December we explained that Hudson Structured Capital Management, the Michael Millette founded transportation, reinsurance and insurance-linked securities (ILS) focused investment manager that undertakes its reinsurance work as HSCM Bermuda, had entered the Special Purpose Acquisition Company (SPAC) market.
With the launch of its SPAC, Kairos Acquisition Corp., Hudson Structured was entering a fundraising and venture focused sector that has been growing rapidly, with currently somewhere close to $86 billion of capital raised through SPAC’s waiting to find an acquisition opportunity to be deployed into.
2020 saw the SPAC marketplace explode, with almost 250 special purpose acquisition companies being taken to IPO during the year, according to specialist analyst and data provider SPAC Research.
The insurance and reinsurance sector is perhaps primed to be attractive right now, for SPAC capital raises and acquisitions.
As rates are rising along the entire market chain in many lines of business, while at the same time the opportunity to disrupt the re/insurance market remains significant and in particular insurtech opportunities are seen as prime investment opportunities by many, making backing a re/insurance and insurtech focused SPAC particularly attractive.
SPAC’s are also an efficient way to help grow existing companies quickly, taking them to listed, IPO’d status without many of the challenges that process can present.
When Kairos Acquisition Corp. was first revealed in December, it was aiming to raise up to $200 million through an initial public offering of shares, with up to another $30 million possible if over-allotment options were exercised in full.
The capital raise was well-received and demand saw those involved lift the total target to $240 million of initial units and an upsized over-allotment option offering of up to $36 million.
It now transpires that the IPO offering was filled and the underwriters have also now taken their full over-allotment offering option, which lifts Kairos’ overall capital raise to gross proceeds of $276 million.
The capital raised will now be put to work in finding an acquisition or combination target, effecting a transaction by putting the capital to work and bringing an established entity to listing through Kairos’ NASDAQ IPO’d structure.
The target sectors for Kairos are the insurance, reinsurance and insurtech sectors, with a broad remit to enter into acquisition or combination transactions with carriers, MGA’s, run-off managers, fronting companies, brokers, other service providers and insurance technology start-ups all potential target entities.
The thesis behind Kairos is similar to other re/insurance focused SPAC’s, that there is significant value locked up in the insurance and reinsurance sector currently and that Kairos, with the support of Hudson Structured, an impressive management team and board, can unlock this value.