Arch Capital Group Ltd. has purchased a minority stake in Coface, a trade credit insurer based in France.
The transaction involves the acquisition of a 29.5 percent stake. Arch will pay €10.70 per share, or €480 million ($520.1 million), based on the current number of shares.
Marc Grandisson, chief executive officer of Bermuda-based Arch, said that the monetary commitment reflects a “long-term strategic investment” in Coface as well as an effort to develop other sources of underwriting income. He added that both companies also have common goals.
“Our companies share a focus on specialty underwriting where knowledge and expertise create value for our clients, and trade credit contributes to Arch’s specialty-driven business model,” Grandisson said in prepared remarks.
As part of the transaction, Arch explained that Natixis’ seven representatives on Coface’s board of directors will resign and be replaced by four Arch nominees. This will result in the majority of Coface’s board members being independent.
Coface has indicated that it will seek a new independent board member and will appoint a chairman of the board from among the independent board members, Arch said.
There are no anticipated impacts on Coface’s or Arch’s employees resulting from the proposed transaction. Arch has indicated that it does not intend to seek control of Coface for a period of 12 months after the closing of the transaction.
The transaction remains subject to antitrust and regulatory approvals, including in particular, approval by the French prudential regulator, the Autorité de Controle Prudentiel et de Résolution (ACPR).
Long Arc Capital acted as strategic advisor, Lazard acted as financial adviser and Willkie Farr & Gallagher LLP acted as legal adviser to Arch in the transaction.
Source: Arch Capital Group Ltd.
*A version of this story ran previously in our sister publication Insurance Journal.