Brazilian reinsurance company IRB Brasil Re set to announce a new share offering, as it seeks to raise close to US $300 million.
IRB Brasil Re prepares the share offering in response to having fallen out of compliance with the local regulators minimum capital requirements. With between R$1 billion and R$1.5 billion to be raised, putting the capital sought near US $200 million to US $300 million.
The follow-on offering of shares is reported as set to price at a discount to current traded prices. The launch of any fundraising attempt is subject to market conditions and other factors.
IRB Brasil Re said that it is studying the possibility of carrying out a fundraising transaction but that as of today, no public offering for distribution of shares issued by the Company is being carried out in Brazil, in the United States of America or in any other jurisdiction.
IRB Brasil Re’s equity capital solvency ratio has dropped to near 105% with 100% or lower a point where the regulator might step in.
After significant losses from crop failures and droughts, IRB Brasil Re looks set to recapitalise to bolster its capital levels and ensure its solvency ratio is well above the minimum required levels.
IRB Brasil Re has also been exploring potential debt financing, as well as equity, or bringing a new investor into the business, which could be an international re/insurer.
Reports suggest existing bank investors could take a bigger stake in the Brazilian reinsurance firm, potentially with a view to taking it private.
IRB Brasil Re is due to report its second-quarter results and so a share offering could be announced as early as with this announcement.