Randall & Quilter brings in £80m of new investment

Programme management and legacy acquisitions specialist Randall & Quilter announced $100m of new equity investment into the group on Wednesday.

The AIM-traded firm said the investments were being made via an $80m subscription by Brickell Insurance Holdings - an investment vehicle controlled by 777 Partners - for a new series of preferred stock issued by Randall & Quilter PS Holdings, which is an indirect, wholly-owned subsidiary of R&Q.

It said those preferred stocks would be exchangeable for ordinary shares in the capital of the company, at a price of £1.35 each.

The investments also consisted of a $20m subscription by funds managed by Hudson Structured Capital Management for 11,902,318 new ordinary shares, at a price of £1.35 each.

R&Q said the aggregate proceeds from the Investment would total around £80.3m.

It said the £1.35 price represented a discount of about 7.2% to the closing mid-market price of 145.5p per share on 28 April.

Proceeds from the Investment would be primarily used to invest in the growth of R&Q's programme management and legacy businesses.

“We have long been clear on the significant opportunities we see for the group in the two fast growing markets we operate in - programme management and legacy,” said executive directors Ken Randall, Alan Quilter and William Spiegel in a joint statement.

“It has become apparent that the market dislocation currently being experienced will only increase demand for these specialist capabilities as the balance sheets of traditional insurance companies come under increased strain.

“The equity we have secured will enable us to proactively and quickly move to capitalise on these dynamics as the market seeks the solutions R&Q is able to provide.”

They said 777 Partners and Hudson Structured are investment firms they have “known and admired” for a number of years, with 777 Partners, through Brickell, already an important stakeholder in R&Q.

“Both are highly regarded investors within the insurance industry, and their investment is a testament to R&Q's reputation as a leader in our two specialty insurance businesses.”

Randall, Quilter and Spiegel also updated the market on the current impact of the Covid-19 coronavirus pandemic, saying employee safety, security and health was their “paramount concern”.

“As a result of Covid-19 we implemented our business continuity plan across all our offices.

“We are pleased to report that our team is successfully working from home and operating in a ‘business as usual’ manner in all of our business locations.”

The directors said they believed the outbreak of the pandemic would have a limited impact on the group's existing business.

“Whilst there will be some near-term delay in completing transactions, we believe the impact of the pandemic on the wider insurance industry will create considerable future opportunity for the group.

“Our existing legacy books have limited exposure to unexpired risk, our programme management portfolios are largely reinsured with highly rated counterparties, and our investment portfolio has an average duration of two years with approximately 92% of our investments rated BBB or better, of which approximately 51% is in government bonds and cash.

“Our conservative investment portfolio has resulted in net unrealised losses of only 1.4% as of 22 April.”

At 1602 BST, shares in Randall & Quilter were up 0.65% at 146.44p.