Bermuda headquartered reinsurance firm Third Point Reinsurance Ltd. has priced its initial public offering of shares and raised slightly less than expected at approximately $276m. The hedge fund backed reinsurer sold 22,053,286 common shares at $12.50 per share, the lower end of proposed range.
Third Point Re, backed by the Third Point LLC hedge fund and its owner Dan Loeb, had offered 22,222,222 of its common shares at an expected offering price of between $12.50 and $14.50 each. It sold a lower number of shares at the lower price range, raising the firm the $276m which it said would equate to proceeds, net of underwriting discounts and commissions, of approximately $252.2 million from the offering.
Of the shares sold in the IPO, 21,524,492 common shares are being offered by Third Point Reinsurance itself while the remaining 528,794 are being offered by certain shareholders who have chosen to sell shares at the offering price. The IPO’s underwriters have the ability to purchase up to 3,307,992 additional shares to enable them to cover any over-allotments. If that happens then Third Point Re would raise additional capital and more than reach its targets.
The proceeds of the sale are to be used for corporate operational purposes, with the bulk likely to be deployed in underwriting contracts. The shares are expected to list on the New York Stock Exchange today and the official closing of the offering is expected to be the 20th August.
According to Bloomberg, Kelso & Co. and Pine Brook Road Partners LLC, two large private equity firms, are among the largest holders of Third Point Re stock. Dan Loeb is said to have approximately 8.5% of the firm after the IPO.
Recent less-than-positive mainstream press on hedge fund reinsurers, which has largely been stimulated by the high-profile nature of Third Point Re’s IPO, has perhaps not helped the firm in reaching its maximum offering goal.
However the firm will be pleased with its successful IPO and Third Point Re will now benefit from increased liquidity in its stock, a new source of underwriting capital from third-party investors and should be able to achieve greater underwriting returns once the raised funds are deployed in reinsurance contracts.
Third Point Re has a strong underwriting team and it will be interesting to watch its progress over the next twelve months.