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IRB announces $430mn capital raise

9th July 2020 - Author: Matt Sheehan

Brazilian reinsurer IRB Brasil Re has announced that it plans to raise between 2.1 billion reais (US $392 million) and 2.3 billion reais ($430 million) to strengthen its capital structure and increase solvency.

irb brasil reThe company said last month that it was considering a potential capital raise, and had hired bankers Banco Bradesco BBI SA and Banco Itaú BBA SA to structure it.

Now, IRB has confirmed that it will issue between 303,030,304 and 331,890,331 shares at a price of 6.93 reais ($1.30) per share.

The move comes in response to an inspection currently being carried out by Brazil’s insurance regulator, which aims to verify the sufficiency of assets underpinning IRB’s technical provisions and regulatory liquidity.

IRB has been under particular scrutiny following a drop in share price earlier this year that came about due to confusion over a possible investment by Berkshire Hathaway, after which President José Carlos Cardoso and CFO Fernando Passos resigned.

Investigations into the company have since identified those responsible for spreading these rumours, while also uncovering “irregularities” in the payment of bonuses.

Additionally, IRB was ordered to come up with 1 billion reais ($194 million) to reimburse shareholders facing losses from the volatility in the company’s share price.

Shareholders Bradesco Seguros S.A. and Itaú Seguros S.A. have agreed to take part in the capital raise in proportion to their share capital of approximately 15.4% and 11.3%, respectively.

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