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Insurer Aspen is targeting New York instead of London for its planned $4bn initial public offering next year, partly because of management concerns about valuations and more stringent listing requirements in the UK, according to people familiar with the decision.
A listing by Aspen in New York, rather than on the London Stock Exchange alongside competitors such as Beazley, would be a fresh blow to the UK market. A number of companies have chosen to switch their listing to the US or float there over the past years.
Aspen is owned by private equity group Apollo and sells insurance and reinsurance through the Lloyd’s of London market as well as in Bermuda and the US.
It was founded in 2002 and is domiciled in Bermuda, but has more than half of its 1,100 employees in London. It was listed in New York until it was bought by Apollo five years ago. It is now being advised by Goldman Sachs, Citi and Jefferies on an IPO planned for the first half of next year, targeting an enterprise value at listing of up to $4bn, according to people familiar with its view.
The company conducted work to compare listing venues. The factors pushing management against London, according to people familiar with their deliberations, included a diminishing valuation premium over similar New York-listed insurers in recent years — and other technical requirements in London, such as that the company would have had to have one year’s worth of figures reaudited because of a change in auditor. It would have also been likely to have to do some work on translating its figures from their US accounting basis.
“As the relative valuations narrowed, then the technical issues become more impactful,” said one of the people, adding that greater liquidity in the US was also “an important factor”.
However, people familiar with Apollo’s position said the owner’s base case was always to relist in New York, given its historic ties, its US accounting basis and that the US is its biggest market. They highlighted Watches of Switzerland, the retailer that was more than 90 per cent owned by Apollo before a successful IPO in London in 2019.
Aspen, Apollo, Goldman, Citi and Jefferies declined to comment. Industry title Insurance Insider previously reported Aspen was planning a US IPO.
Aspen’s chief executive Mark Cloutier was previously the boss of Brit Group, which was also backed by Apollo and chose London for its 2014 IPO, before its acquisition a year later by Canadian group Fairfax Financial.
The number of big specialist insurers listed in London has dwindled with the acquisitions of groups such as Catlin, Amlin and Novae over the past decade. In recent months, Bermuda-based insurers Hamilton and Fidelis have opted for New York IPOs.
The head of the London Stock Exchange Group said last month that it was a “myth” that valuations were higher in the US and that there were no problems with liquidity in the London market.
Conduit Re, a Bermuda-based reinsurer, listed in London in late 2020. Chief executive Trevor Carvey told the Financial Times that a listing in the US would have been a “step too far” at the time, but the same decision today would have been more “50/50” because of liquidity considerations.
“What the US does offer for insurers, and specialist reinsurers, is a greater pool of specialist investor knowledge.”