Investors in the DCG Iris Limited insurance-linked security (ILS) and reinsurance-linked investment fund have demonstrated their confidence in the fund, its strategy and the investment managers, as well as their desire for it to continue by rejecting the recent offer to redeem shares.
DCG Iris announced this morning that none of its existing investors accepted its recent redemption offer to buy back shares at a defined price. That shows that investors want the fund to continue despite it having failed to meet its target to reach £150m in commitments by the 30th June 2013, but only raising just over £61m.
DCG Iris has found raising capital for the ILS fund more difficult than perhaps it had originally thought. This meant it hit the end of its first year without meeting its target which compelled it to hold a continuation vote and offer its shareholders a chance to redeem their shareholdings.
As we wrote a few weeks ago, major shareholders have shown their support for DCG Iris and said that they would buy more shares in the next placement the fund offers. The manager of DCG Iris, Dexion Capital, has also said it would like to buy shares in the fund strategy to help it increase its size, which will in turn help the fund grow its net asset value.
A continuation vote will be held at an extraordinary general meeting on the 5th September. Given that investors declined the chance to redeem shares at a pre-set price it’s likely that they will vote to continue the fund and also approve the various related party transactions allowing key shareholders to increase holdings to help grow the fund.
It looks like DCG Iris will get the chance to launch another share placement in the not too distant future, as long as the continuation vote is successful. It will be interesting to see how much it can grow its assets under management and we will of course keep you updated on its progress and the results of the vote.