London-listed SPAC launches Lloyd’s of London investment vehicle
- Financials Acquisition revealed it had created London Innovation Underwriters
- SPACs are blank check companies formed specifically to raise capital through an initial public offering (IPO).
A special purpose acquisition company has launched a new listed business providing investors with access to the Lloyd’s of London insurance market.
Financials Acquisition revealed that it had created London Innovation Underwriters (LIU), with which it intends to merge to raise significant amounts of capital through a listing on the UK capital’s stock exchange.
He believes the combination would create an “efficient vehicle” that would allow investors to build market exposure without needing to shell out goodwill payments or create additional fee structures.
Fined: Financials Acquisition revealed it had created London Innovation Underwriters (LIU), a vehicle intended to give investors access to the Lloyd’s of London insurance market.
LIU plans to access the Lloyd’s insurance market through London Bridge 2, a platform that makes it easier for participants to deal with investors in insurance-linked securities.
Financials said it expects LIU to have enough capital to support up to £1bn of capacity once the merger is complete.
SPACs are blank check companies formed specifically to raise capital through an initial public offering with the intention of purchasing another company.
They boomed during the height of the Covid-19 pandemic, especially in the US, as companies looked for a way to go public faster and cheaper.
However, its popularity began to plummet in 2022 following a series of high-profile bankruptcies, as well as rising interest rates and economic uncertainty.
Will Allen, CEO and co-founder of Financials Acquisition, said: “We believe LIU will offer a unique opportunity for investors to gain efficient access and diversified exposure to the liquid Lloyd’s market.
“We are pleased with the initial reaction we have received from both investors and underwriters and look forward to the next stage of the transaction.”
Allen, former CEO of investment bank KBW, set up Financials last year with former Munich Re executive Andy Rear through a partnership called Finsac.
Financials’ announcement comes a day after Lloyd’s declared a pre-tax profit of £3.9bn for the first six months of 2023, having suffered a £1.8bn loss in the same period last year .
Profits were boosted by strong investment returns and underwriting profits more than doubled to £2.5bn, thanks to a decline in large loss events.
Gross written premiums rose 22 per cent to £29.3 billion due to rising prices and the growth of new and existing syndicates.
John O’Neal, chief executive of Lloyd’s, said the results “show that we are now driving a steady improvement in profitability and the ability to grow sustainably.” “This performance puts us in a strong position for the second half of the year.”