Prospects for an independent R&Q

R&Q is expected to launch a US$100m fundraising on or around 13 June 2022 following the release of its FY21 results. It has stated that it expects to offer a maximum of 10% of its issued share capital on a firm basis and additional shares conditional upon shareholder approval at an SGM expected to take place on or around 11 July 2022.

On 1 April 2022 R&Q announced a recommended (175p/share) acquisition by its major shareholder, Brickell PC Insurance Holdings LLC (Brickell). The price represented 1.8x tangible net asset value and a 20% premium to the unaffected market price. That was accompanied by news of Brickell’s commitment to provide US$100m of new equity. This transaction was prompted by the results of in-depth review of the group’s legacy insurance portfolio initiated by new management in Q4 2021.

This reflects the need for this subsidiary, acquired 15 years ago, to provide liquidity to meet anticipated claims which have accelerated above expectations. The impairment is not related to either of its two core businesses nor any of the Accredited companies, which are capitalised above target levels.

The group reported that it continues its transformational into a primarily recurring fee-based business by 2024, but the uncertainty related to an unsuccessful takeover bid has adversely affected the shares. The business’s underlying strengths remain intact, subject to successful and timely completion of the fundraising.