Legacy specialist Enstar Group is set to repurchase 3,749,400 of ordinary shares currently held by Hillhouse Capital Management for a total of $879.3 million.
The shares represent Hillhouse’s entire interest in Enstar and consist of 16.9% total ordinary shares and 9.4% voting ordinary shares.
The transaction is expected to close within a week, subject to satisfaction of customary closing conditions.
Concurrently, an Enstar subsidiary has agreed to purchase a Hillhouse affiliate’s entire 27.7% interest in Enhanzed Re for an estimated purchase price of $228.7 million.
This price is based on 90% of Enhanzed Re’s estimated total shareholders’ equity as of June 30 and is subject to adjustment.
After the purchase of the Enhanzed Re shares from the Hillhouse affiliate, Enstar’s equity interest in the Bermuda-based reinsurer will increase from 47.4% to 75.1%, with joint venture partner, Allianz SE, continuing to own the remaining 24.9%.
Closing of this transaction is subject to satisfaction of customary conditions, including approval by the Bermuda Monetary Authority, and is expected to occur by the fourth quarter of 2021.
Enstar intends to fund the purchases using cash on hand and liquidity available under its revolving credit facility. Enstar’s previously announced share buyback program has been terminated.
Dominic Silvester, Enstar’s Chief Executive Officer, said, “We view these transactions as a compelling opportunity for Enstar to deploy capital strategically to repurchase shares at a discount to book value and to acquire control of the Enhanzed Re platform on terms expected to be accretive to Enstar.
“Following completion of the share repurchase and the acquisition of Enhanzed Re, Enstar will maintain a strong capital and liquidity position, allowing us to continue to pursue future run-off transactions.
“In 2021 we have already completed a record amount of transactions in terms of size, and we continue to see a healthy legacy pipeline.”