Specialist private equity investor Kelso & Company is selling almost 70% of its stake in Bermudian hedge fund backed reinsurance firm Third Point Re, in a secondary offering of 15 million shares.
At yesterday’s closing price of $16.80, the 15 million shares will raise Kelso around $252 million.
The shares represent approximately 14% of Third Point Re’s share capital outstanding, so is a meaningful sale of equity in the reinsurer.
The shares are being sold by two Kelso private equity fund entities, KIA TP Holdings, L.P. and KEP TP Holdings, L.P., to J.P. Morgan Securities LLC, acting as the sole underwriter. J.P. Morgan Securities LLC will also have an option to buy an additional 2.25 million shares if it chooses, which would take the total sold to 17.25 million, amounting to over $298 million of Third Point Re’s share capital at yesterday’s closing price.
Third Point Re won’t receive any of the proceeds from the share sale, with the funds raised going to Kelso. Hence this looks like an investor seeking liquidity, which in the case of Kelso could mean its LP’s requested the sale or that the capital will go into its other private equity strategies.
Analysts at KBW said that while Third Point Re’s shares may trade down today, as a result of the announced sale, they would expect the share price to recover back to recent levels in time given Third Point Re’s strong performance in recent months.
