Bermuda-based insurance and reinsurance holding company, Fidelis Insurance Holdings Limited, has announced the launch of its initial public offering (IPO) of 17 million of its common shares, as the firm looks to “take advantage of the ongoing rate hardening” in key markets.
The offering announced by Fidelis includes 5,714,286 of common shares offered by the company and 11,285,714 of common shares to be sold by certain of its existing shareholders.
Additionally, underwriters will have a 30-day option to purchase a further 2,550,000 common shares from the selling shareholders.
Currently, Fidelis expects the IPO price to be between USD 16.00 and USD 19.00 per common share, which will trade on the New York Stock Exchange (NYSE) under the ticker symbol FIHL.
At the lower end of the expected share price, total funds raised from the IPO of the 17 million shares amounts to USD 272 million, rising to almost USD 313 million should the option to buy the additional 2.55 million shares be exercised.
At the high end, the IPO would raise as much as USD 323 million of capital from the sale of 17 million of its common shares, rising to more than USD 371 million if the additional shares are acquired by underwriters from the selling shareholders.
However, Fidelis states that it will not receive any of the proceeds from the sale of its common shares by the selling shareholders, meaning the funds raised from the selling of the 5,714,286 of its common shares are what will be available as additional capital to fund growth. At a share price of USD 16.00, this amounts to more than USD 91 million, and at a share price of USD 19.00 amounts to over USD 108 million.
The company says that it intends to use the net proceeds of the IPO to make capital contributions to its insurance subsidiaries, which are based in Bermuda, Ireland, and the UK. The raised funds, together with other sources of liquidity, “should enable the Company to take advantage of the ongoing rate hardening in the key markets in which it participates by writing more business under its planned strategy.”
Despite the hardening cycle the reinsurance market is currently in, there’s been a notable lack of capital raised by players when compared with previous hard markets. So, it’s promising that Fidelis has confirmed its IPO and highlighted its desire to capitalise on current market conditions.
The IPO comes after the firm completed the creation of a new MGU separate from its existing balance sheet insurance companies, which enabled the company to access the underwriting expertise of Fidelis MGU.
