Helios Underwriting PLC (AIM:HUW) got a thumbs up from US broker Jefferies after the insurance firm announced its intention to raise £13.5mln in a financing to support its underwriting and fund the acquisition of new Lloyd's vehicles (LLVs).
Earlier today Helios announced a conditional placing, subscription and open offer of new equity priced at £1.56 each, in line with the current share price.
The placing is expected to raise up to £12mln via an accelerated book build, while a conditional open offer for 984,088 new shares is expected to raise up to £1.5mln. Helios's chairman is expected to contribute £312,000 for 200,000 ordinary shares.
The company said the proceeds will "assist in the funding of the necessary underwriting capital for the 2023 underwriting year and for acquiring new LLV's".
The Jefferies analysts said that, as they noted in their initiation note, "because Helios is one of the few ways for the £3bn of Names' backed capacity to exit, it's our view that the group should buy as many LLV's as possible, even if a further equity raise is required".
The analysts noted: "Given the market-wide dislocation and pricing surge now expected in 2023, we agree that the timing of this £13.5m equity raise is ideal. Crucially, the group has already been successfully deploying capital to acquire new Lloyd's vehicles, and, as such, we expect Helios to be equally successful following this raise."
They said: "We also expect this to allow the group to reduce its reinsurance and retain risk (which will be better priced)."
Jefferies repeated a 'hold' rating and 140p price target on Helios Underwriting shares.