Alea IPO gives KKR partial exit

The IPO of Alea, the Bermuda-based reinsurer owned by Kohlberg Kravis Roberts, was priced at 250p today - valuing the company at £433m.

Alea, the Bermuda-based reinsurer, was valued at £433m when it joined the London Stock Exchange earlier today.

Despite the offer price being at the bottom end of the indicative price range of 250p to 300p, the IPO will re-ignite hopes that the stock market is set to re-open as a potential source of exits for private equity firms. 

The offer comprised 66m new shares in the company worth £165m and was reported to be three times oversubscribed. But according to Dow Jones Newswires, sources close to the deal said it had been tough to persuade investors of the company’s strengths due to concerns about the insurance industry in the US, where Alea conducts most of its business.

In conditional dealing this morning, the firm’s shares rose 14p (5.6 per cent) to 264p amid low trading as most investors opted to keep the shares allotted to them on flotation. KKR used the flotation to reduce its stake from an initial 60 per cent to 39.4 per cent, which it is locked in to holding for at least six months.

Alea was formed six years ago when it acquired reinsurer Rhine Re and specialises in reinsurance and speciality insurance business lines. Its gross premiums have grown by a compound annual rate of 44 per cent since 2000 and CEO Dennis Purkiss said he expected premium rates to strengthen in the next 12 months.