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TowerBrook and Further Global confirm $586mn purchase of ProSight

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TowerBrook and Further Global have confirmed that they are to buy ProSight, with the parties agreeing on an all-cash deal worth $586mn.

The purchase price is $12.85 per share, which is 42% more than the closing price on September 23, before this publication first broke news that the two parties were in talks.

However, it is 10.4% below Thursday’s closing price of $14.19, with confirmation of the transaction today sending ProSight shares down more than 8% in pre-market trading.

Earlier today, this publication broke the news that the deal – which will also see former Validus executive Jonathan Ritz join ProSight as CEO – was imminent.

TowerBrook will acquire a majority stake in ProSight, with Further Global a “key minority co-investor”, the buyers said.

The acquisition is expected to close in the third quarter of 2021 and is subject to various closing conditions and also to the completion of a reinsurance transaction with Enstar that the legacy company today announced separately. The Enstar deal involves the cession by ProSight of net loss reserves of about $500mn, with an Enstar subsidiary providing additional aggregate limit of $250mn.

ProSight backers Goldman Sachs and TPG Global have agreed to approve the deal, meaning no additional stockholder approval is necessary, since they own about 75% of the New York-listed entity.

As this publication revealed earlier, Ritz, previously CEO of Validus’ US insurance company, will become CEO. ProSight's current president and CEO, Larry Hannon, will remain president.

The deal partners said that being private will give ProSight the “flexibility and capital to accelerate its next stage of growth” and noted that its top executives and new backers will work together on ProSight's development and “strategic realignment”.

Ritz said: “This is a very exciting and challenging insurance market which is undergoing significant changes in distribution, pricing, capital management, and capacity exiting across many lines of business.

"Increased frequency and magnitude of natural catastrophes, social inflation, and the Covid-19 crisis have contributed to substantial market dislocations, and ProSight represents a quality platform that is well-positioned to capitalize on this environment. I am looking forward to working with the Company's many talented underwriters, employees, and distribution partners to build a market-leading specialty insurance company."

Hanson noted that the takeover “will expand ProSight's underwriting capabilities and fund investments in talent and technology that will improve our offerings to distribution partners and customers”.

ProSight’s new backers said the deal reflects their “targeted approach” to the insurance sector.

TowerBrook aims to “back strong management teams operating in growth markets” and has a long history of investing in the (re)insurance sector, the companies noted, while Further Global’s investment is a “continuation of its principals' successful track record of investing in the insurance and reinsurance industries over the past 22 years”.

ProSight’s financial advisers are Barclays and Goldman Sachs and its law firms are Ropes & Gray and Sullivan & Cromwell.

Piper Sandler is financial adviser to TowerBrook. Sidley Austin is legal adviser to TowerBrook and Further Global, with Kirkland & Ellis also advising Further Global.

Truist Securities is acting as lead arranger on financing for the transaction. Guy Carpenter & Company is advising ProSight on the Enstar reinsurance deal.

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