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Renaissance Insurance announces indicative price range for IPO
Moscow, 11 October 2021 – Renaissance Insurance Group PJSC (“Renaissance Insurance” or the “Company”, and together with its consolidated subsidiaries, the “Group”), a Russian diversified independent insurance company, today announces the indicative price range for its initial public offering (the “Offering”) and planned listing of ordinary shares (the “Ordinary Shares”) on Moscow Exchange, and the publication of the offering memorandum in respect of the Offering (the “Offering Memorandum”).
The indicative price range in respect of the Offering (the “Offering Price Range”) has been set at between RUB 120 and RUB 135 per Ordinary Share. This would result in an expected market capitalisation of between RUB 67.2 billion and RUB 73.3 billion on a post-money basis¹.
Boris Jordan, President and Chairman of the Board of Directors of Renaissance Insurance, said:
“I am delighted with the positive response we have received to the proposed IPO of Renaissance Insurance from the global investment community. We believe that Renaissance Insurance represents an attractive opportunity for a wide range of investors to gain exposure to a digital pioneer in an expanding market with strong long-term growth prospects. As a nimble and dynamic tech-enabled player, our company is leading the way at an exciting time in the development of the Russian insurance market and pioneering a uniquely customer-friendly offering. We are well positioned to leverage our highly efficient digital platform to act as a consolidator of the Russian insurance market while also capturing emerging and exciting growth opportunities and partnering with the leaders of Russia’s new economy. I believe that the growth potential created by our digital-first model, combined with an attractive dividend policy that sets a target payment level of 50% of consolidated net profit on an annual basis, make Renaissance Insurance an attractive proposition for both international institutions and the domestic retail investment audience alike, and look forward to telling our story to investors over the coming days.”
- The Offering Price Range has been set at between RUB 120 and RUB 135 per Ordinary Share, implying an expected market capitalisation of between RUB 67.2 billion and RUB 73.3 billion on a post-money basis.
- The Offering size is expected to total up to RUB 25.2 billion (excluding any Over-Allotment Option, as defined below) and includes an offering of Primary Shares by the Company totalling to up to RUB 18 billion, and an offering of Secondary Shares by the Selling Shareholders (as defined below) totalling up to RUB 7.2 billion.
- Proceeds from the primary component of the Offering will be used to accelerate the Group’s development by financing organic growth, investments in further digital initiatives, potential value-accretive acquisitions.
- The Selling Shareholders comprise (i) Sputnik Management Services Limited and its affiliate LLC “Holding Renaissance Insurance” (whose main ultimate beneficial owners are Boris Alexis Jordan, Mary Louise Ferrier, Dmitry Bakatin and Sergei Riabtsov), (ii) NOTIVIA LTD (beneficially owned by Baring Vostok), (iii) Laypine Ltd (owned by Alexander Abramov), (iv) Bladeglow Limited (owned by Alexander Frolov), and (v) Andrey Gorodilov.
- In addition, for the purposes of potential stabilisation, certain Selling Shareholders are expected to grant a stabilising manager (the “Stabilising Manager”) a call option to require such Selling Shareholders to sell up to a certain number of shares (the “Over-Allotment Option”). The aggregate number of shares subject to the Over-Allotment Option will not exceed 10% of the Offering.
- The Company is expected to apply for admission of the Ordinary Shares to trading on the Moscow Exchange under the symbol “RENI” on or about 20 October 2021.
- The Offering is expected to comprise an offering of the Ordinary Shares (i) in the Russian Federation, (ii) otherwise outside the United States in reliance on Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and (iii) within the United States to certain qualified institutional buyers as defined in, and in reliance on, Rule 144A under the Securities Act.
- The Company and its shareholders have agreed to be subject to customary lock-up arrangements for a period of 180 days.
- The Ordinary Shares are expected to be admitted to Level 1 of the List of Securities Admitted to Trading on Moscow Exchange. Prior to this Offering, there has been no public market for the Ordinary Shares.
- Credit Suisse, J.P. Morgan and VTB Capital are acting as Joint Global Coordinators and Joint Bookrunners. BCS Global Markets is acting as the Senior Bookrunner. Renaissance Capital, Sberbank, Tinkoff and Sova Capital are acting as Joint Bookrunners.
Additional details will be disclosed in the Offering Memorandum published by the Company, which will be made available on the Company’s website at www.renins.ru.
The final price in respect of the Offering (the “Offering Price”) will be determined following a bookbuilding process, which commences today. The Offering Price is expected to be announced on or around 20 October 2021 (the “Pricing Date”). Subject to acceleration or extension of the timetable for the Offering, trading in ordinary shares of the Company on Moscow Exchange is expected to commence on or about the Pricing Date subject to the closing of the Offering.
Renaissance Insurance highlights
- Digital disruptor in the Russian insurance market. Renaissance Insurance has successfully pioneered digital innovations that differentiate it from competitors and drive organic growth. Digitalisation runs through the Group’s entire value chain from distribution (direct online and indirect channels, as well as partnerships and digitalisation of traditional channels), underwriting and claims handling, to back office and operational efficiency. All of the Group’s initiatives and their successful implementations are supported by an agile organisational structure and an entrepreneurial culture that are quick to adapt and deliver. The Group’s innovative digital products include the Budu app, the gateway to the Group’s Digital Health ecosystem, which is designed to capitalise on the high growth potential that the Group sees in the Russian digital health services market and opportunities for offering related B2C and B2B services.
- Leading independent Russian insurer across life and non-life segments. The Group is a market leader in life insurance and the fourth largest non-life insurance company among the independent (non-captive, non-state) insurance players in Russia, based on gross written premiums (GWP) for the years ended 31 December 2020 and 2019. In 2020, the Group had 11% market share by total GWP in the life segment, more than double that of the second largest independent life insurer in Russia. In non-life insurance, the Group had a 3.4% market share by total GWP during the same period. Based on total GWP, the Group was the eighth largest insurance company in Russia in 2020. Non-Life GWP represented 45% and Life GWP represented 55% of the Group’s total GWP for the year ended 31 December 2020.
- Superior growth and substantial potential of Russian insurance market. The Russian insurance market has grown faster than the global average, with a CAGR for GWP of 11% between 2010 and 2020. Sector GWP reached RUB 1,537 billion in 2020, approximately three times the level of 2010, according to the Central Bank of Russia (CBR) data. Between 2010 and 2020, the more mature non-life insurance sector demonstrated attractive growth with a CAGR of 8%, while the emerging life insurance sector grew tremendously with a CAGR of 34%. At the same time, the market remains significantly underpenetrated compared to other EMEA markets, indicating further fundamental potential for accelerated expansion. According to KPMG, the Russian insurance market is expected to expand at a CAGR of 11% between 2020 and 2024, with GWP reaching RUB 2.3 trillion.
- Robust financial performance, with faster growth and superior profitability compared to peers. Renaissance Insurance achieved a compound annual growth rate (CAGR) of 17% for GWP from 2017 to 2020, almost double the annual CAGR for GWP (9%) of the other top-10 insurance players, according to the Company and CBR data. The recent growth is in line with the Group’s long-term trends: the Group grew its GWP by 6.5x between 2010 and 2020, from RUB 12.8 billion² to RUB 82.8 billion, primarily driven by organic expansion and value accretive M&A transactions. This attractive growth profile has been accompanied by high profitability. The Group’s return on tangible equity (RoATE) for the years ended 31 December 2020 and 31 December 2019 reached 29% on average, significantly higher than the 19% on average achieved by the other top-10 players³ for the same period, based on companies’ IFRS financial statements. Net profit grew at a CAGR of 18% from approximately RUB 3.4 billion in 2018 to approximately RUB 4.7 billion in 2020. Under its dividend policy, the Company aims to pay out dividends in the amount of at least 50% of consolidated net profit on an annual basis. Decisions on the recommended dividend amount will be made subject to the Group’s investment needs in terms of business development (including M&A), the achievement of key strategic goals and compliance with capital adequacy and other regulatory requirements.
- Experienced management team with a strong leadership track record supported by highly regarded founder and entrepreneurial long-term shareholders. The Renaissance Insurance management team has many years of successful experience at Russian financial and non-financial companies. Key members of the team have worked at the Group for more than 10 years. Renaissance Insurance CEO Yulia Gadliba has been voted one of Russia’s top women CEOs by Forbes Russia for the past three years. Renaissance Life Ltd CEO Oleg Kiselev has been with the Company since its foundation and has been a key player in the development of the Russian life insurance market. The Company was founded by Boris Jordan, a US-Russian businessman and entrepreneur who has built successful businesses in the US, Europe and Russia (and has taken US and European businesses public). In addition to LLC “Holding Renaissance Insurance” (52.12%), whose main ultimate beneficial owners are Boris Alexis Jordan, Mary Louise Ferrier, Dmitry Bakatin and Sergei Riabtsov, the Group’s shareholders include NOTIVIA LTD (12.08%) beneficially owned by Baring Vostok, Centimus Investments (9.99%) owned by Roman Abramovich, Laypine Ltd (9.55%) owned by Alexander Abramov, Bladeglow Limited (4.77%) owned by Alexander Frolov, Andrey Gorodilov (4.33%) and Sputnik Management Services Limited (7.16%) whose ultimate beneficial owners are the main ultimate beneficial owners of Holding Renaissance Insurance LLC, all of whom recognise the substantial potential of the Russian insurance market.