Enstar Group is set to acquire more than 3.7 million of its own shares from funds managed by Hillhouse Capital Management.
Enstar entered into an agreement to repurchase 3,749,400 ordinary Enstar shares for $234.52 per share, totaling $879.3 million in aggregate, a discount to book value. The shares represent the Hillhouse funds’ entire interest in Enstar, which constitutes 16.9 percent of total ordinary shares and 9.4 percent of voting ordinary shares.
The transaction is expected to close on or about July 21, 2021, subject to satisfaction of customary closing conditions.
Meanwhile, Enstar’s wholly owned subsidiary agreed to acquire a Hillhouse affiliate’s entire 27.7 percent interest in Enhanzed Reinsurance for an estimated price of $228.7 million.
The purchase price is based on 90 percent of Enhanzed Re’s estimated total shareholders’ equity as of June 30, 2021. The price will be adjusted to reflect Enhanzed Re’s balance sheet at the time of the sale.
Once the Enhanzed Re shares have been acquired, Enstar’s equity interest in the Bermuda-based reinsurer will increase from 47.4 percent to 75.1 percent. Joint venture partner Allianz SE will continue to own the remaining 24.9 percent.
Closing of this transaction is subject to satisfaction of customary conditions, including approval by the Bermuda Monetary Authority, and is expected to occur by the fourth quarter of 2021.
Enstar will finance the acquisitions with cash and liquidity available under its revolving credit facility. Enstar’s previously announced share buyback programme has been terminated.
Dominic Silvester, Enstar’s chief executive officer, said: “We view these transactions as a compelling opportunity for Enstar to deploy capital strategically to repurchase shares at a discount to book value and to acquire control of the Enhanzed Re platform on terms expected to be accretive to Enstar.”
Silvester said Enstar will maintain a strong capital and liquidity position after the acquisitions and it will continue to look for more run-off transactions. “In 2021 we have already completed a record amount of transactions in terms of size, and we continue to see a healthy legacy pipeline,” he said.
The Hillhouse funds originally acquired Enstar shares in 2016 from Goldman Sachs, acquiring additional shares in an exchange transaction with Enstar in 2018.
Enstar, Enhanzed Re, Hillhouse Capital Management, Dominic Silvester