Russian insurance company Renaissance Insurance Group announced the final price for its initial public offering (IPO) on Moscow Exchange of RUB120 ($1.69) per ordinary shares and completed the listing on October 21. The floatation gave the company a total post-money capitalisation of RUB67bn ($943mn) and the amount raised in the offering was RUB17.7bn ($250mn).
The IPO makes Renaissance Insurance the first privately owned insurance company to list on the Russian exchange. The announced price was at the lower end of the band of the previously given guidance of RUB120 to RUB135 per ordinary share.
The firm was founded and managed by well know American financier Boris Jordan, who set up the company in 1997, Renaissance Insurance boasts a leading digital platform, with everything from indemnity statements to mobility and health ecosystems available online. The other investors in the company include investment company Millhouse Capital of Russian tycoon Roman Abramovich and the storied private equity fund Baring Vostok run by Russia’s best known fund manager Michael Calvey, both of which are anchor shareholders.
"The proceeds from the newly issued Ordinary Shares will be used to finance the Company’s organic growth and digital investments, as well as potential value-accretive M&A," RenCap commented in a press release.
Having cut his teeth in Russia by making a fortune for Credit Suisse during the 1990s voucher privatizations, Jordan is one of the most experienced investment bankers on the Russia market. He went on to found Renaissance Capital, a leading investment bank, although he sold out of the bank to his partner Stephen Jennings well over a decade ago, but kept the insurance business as part of his Sputnik Group of investments.
Jordan recently became a billionaire following the IPO of his medical and wellness cannabis producer Curaleaf, which floated in Canada in October 2018. While his investments are now international, the native New Yorker was born to Russian parents and remains very active in Russian business.
In a recent interview with Vedomosti, Jordan said that digitisation is key to being a competitive player in the Russian insurance sector, explaining that listing is an effective way of raising capital and gaining market share. He considers the other insurers in the market to be relatively weak players, and wishes to keep Renaissance “ahead of the curve.”
"Renaissance Insurance today becomes the first Russian insurer to complete a fully marketed international IPO. Our offering attracted interest from a broad range of institutional investors from around the world keen to gain exposure to a digitally enabled pioneer in the fast evolving Russian insurance market, as well as strong interest from domestic Russian individual investors, many of whom already know and believe in us as customers," Jordan said in a statement announcing the results of the IPO.
The listing comes during a good time for publically traded financial institutions in Russia. Russia’s banking sector is currently earning record profits and the insurance sector is also doing well. Insurance premiums totalled RUB434.4bn ($6bn) in the second quarter y/y, exceeding last year's and pre-coronavirus levels, the regulator reported in September.
The RTS stock market index this week passed the important 1,900 mark again for the first time in a decade. Overall the Russian stock market is up 32% YTD, but the index has largely been lifted by financial stocks which are well over 70%, as investors use them as a proxy for Russia’s general post-coronavirus economic recovery. Russia’s retail banking giant Sber (formerly known as Sberbank) became the most valuable bank in Europe on October 7. Previously the British HSBC held the first place, Russian media reported.
Moreover, with the international markets flush with QE and stimulous money released last year Russia has been enjoying an IPO boom with almost a dozen IPOs since the start of last year and at least seven more names in the queue intending to list soon.
Investors believe that Renaissance Insurance could use some of the capital raised to continue growing via M&A. Jordan said in the press release: “By pricing our Offering competitively, we have left plenty of money on the table and create a solid foundation for long-term share price appreciation and growth of shareholder value. I am pleased to welcome all of our new investors alongside our established and committed long-term shareholders, and look forward to sharing with them Renaissance Insurance’s journey as a public company.”