Investors edging to take one more swing at a large-cap out public debut before the year closes have a new deal to aim at.
Hamilton Insurance Group Ltd. is seeking to raise up to $270 million in an initial public offering (IPO) in what could be one of this year's last major listings.
On Wednesday, November 1, Hamilton unveiled terms for the deal in an S-1/A filing. A total of 15 million Class B common shares will be made available, with the company offering 6.25 million shares and selling stockholders offering 8.75 million shares. The shares will be priced between $16 to $18 apiece. If the market buys in at the top of the range, Hamilton could achieve a valuation of roughly $2 billion.
Barclays, Morgan Stanley, Citigroup, and Wells Fargo are the leading underwriters for the deal, with BMO Capital Markets, Dowling & Partners, JMP, Keefe, Bruyette & Woods, and Commerzbank AG following on in support.
Hamilton first filed its S-1 for its IPO with the Securities and Exchange Commission (SEC) last month without disclosing terms, having already confidentially submitted documents to the SEC in May.
Established in 2013, Hamilton Insurance Group is a Bermuda-headquartered firm that underwrites specialty insurance and reinsurance risks globally via wholly-owned subsidiaries. The company generated $1.2 billion in revenue in the twelve months leading up to June 30 this year. It turned a profit of around $87 million during the period. The firm claims to have almost tripled gross premiums written over the past five years.
The gangbuster IPO market of 2021 has become a distant memory as investors spent this year waiting for conditions to improve for launches. Despite encouraging signs of life, the overall deal flow has not recovered significantly from 2022's historic collapse. For IPO bulls, recent debuts have been rather sobering.
Valuations for British chip designer Arm Holdings, grocery delivery platform Instacart, and German sandal maker Birkenstock have all slumped steeply since they started trading in recent weeks. The orthopedic footwear brand had a particularly bruising debut, tripping to close out its first day of trading down 13 percent.
These fizzle-and-flop deals have sent jitters running down the cue. Some IPO candidates, like BrightSpring Health Services and Rubrik, are backing away from the launchpad and rethinking their timelines.
Hamilton's float could also be a bellwether for the broader insurance sector. The sector-specific S&P Insurance Select Industry Index is up over 4.5 percent this year, yet headline growth may cause deeper issues.
According to Delloite Insights, the insurance industry is racing to raise prices to cover costs as it battles headwinds from the rising frequency of catastrophic events and elevated inflation.
The property and casualty insurance (or “non-life insurance”) industry took on nearly $27 billion in net underwriting loss last year – more than six times the losses from 2021. Results for Q1 2023 weren't pretty either. The U.S. industry's US$7.34 billion consolidated net underwriting loss was the largest quarterly loss in a dozen years. With margins being squeezed, the U.S. non-life market faces the challenge of rising prices fast enough to cover spiraling payouts.
Before adding Hamilton to their watchlist, investors will likely consider the timing of the deal, the outlook for specialty insurance, and the fundamentals of the business.
This article was produced and syndicated by Wealth of Geeks.