Renaissance Insurance expects to carry out SPO a year after IPO, after boosting value - Jordan

MOSCOW. Dec 20 (Interfax) - Renaissance Insurance Group, which listed on the Moscow Exchange in October, expects to carry out an SPO a year after the initial public offering, the company's president, chairman and co-owner, Boris Jordan said in an interview with Interfax.

The insurer's IPO initially included both a primary and secondary component, as current shareholders planned to sell some of their shares. But the secondary component was cancelled and only the company itself raised money in the offering.

"There was a secondary component because banks proposed to increase sales and the liquidity of the shares with its inclusion. We, as shareholders, persuaded the banks that we'd manage to do the IPO without this and do the SPO, considering planned M&A, in a year, but already after the revaluation [of the company by the market]," Jordan said.

He also said that the overallotment option in the amount of 10% of the basic size of the IPO was not exercised.

Renaissance Insurance is the first Russian insurance company to carry out an IPO. Speaking about the timing of the offering, Jordan said "2021 was quite an appropriate time for this."

"The economic situation in the country, in terms of macroeconomic factors, was rated as good at the time of the IPO. The level of government debt is one of the lowest in the world, the market is stable, the ruble is strong, prices for oil, gas, metals - everything is at high points, attracting the attention of investors, including international ones, to Russian markets," Jordan said.

"We decided not to enter the market by the valuations of fintech companies, despite the fact that Renaissance Insurance is 100% a digital company. It seemed right to us to use the valuations applied on the market for European conventional insurers, meaning at a multiplier of eight to ten times profit. As a result, the IPO deal was successful," Jordan said.

"If a company comes out in an IPO according to a traditional valuation for insurers, and then later manages to demonstrate that it's a fintech company, its shares will already be able to trade with multipliers of 20-25 times profit like in the group of fintech assets, rather than 8-10. For investors, this could double their investments, while the company itself received investment needed for development. For us, these are factors of a successful IPO," Jordan said, commenting on the reasoning behind the preparation and organization of the offering.

Renaissance Insurance carried out its IPO in late October at the low end of the price range, 120 rubles per share, valuing the company at 66.8 billion rubles (slightly less than $0.95 billion). The insurer sold 147.273 million new shares for 17.7 billion rubles.

Credit Suisse, J.P.Morgan andVTB Capital acted as the joint global coordinators and joint bookrunners, BCS Global Markets was senior bookrunner and Renaissance Capital, Sberbank Tinkoff Bank and Sova Capital were joint bookrunners.

The free float after the IPO was about 24%. The Sputnik Group of Jordan and his partners owns 38.3% of the insurer, Baring Vostok holds 13.7%, a company controlled by billionaire Roman Abramovich owns 9.7%, and his partners Alexander Abramov, Alexander Frolov and and Andrey Gorodilov control 7%, 3.5% and 3.2%, respectively.

The company and its shareholders have committed to a six-month lockup after the IPO.