REG - Financials Acqn.Corp Financials Acqn-FNWR - Notice of EGM and Business Combination with LIU

Financials AcquisitionAnnouncement

30/10/2023 17:00

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RNS Number : 7593R  Financials Acquisition Corp  30 October 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW
PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, INTO OR WITHIN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH
AFRICA OR ANY OTHER JURISDICTION WHERE SUCH RELEASE, PUBLICATION OR
DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR
CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY
PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN
FINANCIALS ACQUISITION CORP., LONDON INNOVATION UNDERWRITERS LIMITED OR ANY
OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF
ITS DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH,
ANY INVESTMENT DECISION IN RESPECT OF FINANCIALS ACQUISITION CORP. OR LONDON
INNOVATION UNDERWRITERS LIMITED.

Financials Acquisition Corp ("FAC" or the "Company")

 

Notice of Extraordinary General Meeting, commencement of redemption period and
Business Combination with London Innovation Underwriters Limited ("LIU")

 

The Company announces that is has today posted a circular to its shareholders
convening an Extraordinary General Meeting ("EGM") to be held at 10:00 a.m. on
14 November 2023 at the offices of Winston & Strawn London LLP, Level 33,
100 Bishopsgate, London EC2N 4AG (the "Circular").

 

The Company further announces that it has today entered into a business
combination agreement with LIU (the "Business Combination").

 

A copy of the Circular is available from the Company's website,
https://www.finsac.co.uk/ (https://www.finsac.co.uk/) .

 

All references to times in this timetable are to London times and each of the
times and dates are indicative only and may be subject to change.

 

Terms used and not defined in this announcement shall have the same meanings
given to them in the Circular.

 

 

Overview

 

The Company was formed for the purpose of entering into a business combination
with a technology enabled company or business operating principally in (or
adjacent to) the insurance or broader financial services industry. The
Business Combination is the result of an extensive search for potential
opportunities in the insurance or broader financial services industries by
FAC, utilising the management team's skills and relationships within the
insurance industry and the Lloyd's of London market in particular.

 

 

Extraordinary General Meeting

 

The EGM is being convened in order to approve the Business Combination.

 

The proposed resolutions set out in the Circular are inter-conditional and
each resolution must be approved in order for the other resolutions to be
deemed approved. The completion of the Business Combination is conditional on
each of the resolutions being passed and, among other things, admission of
LIU's Class A Ordinary Shares and Public Warrants to the Official List (by way
of a Standard Listing under Chapters 14 and 20 of the FCA Listing Rules), and
to trading on the main market of the London Stock Exchange, and LIU having
received sufficient commitments pursuant to the LIU Capital Raise (as defined
below) to raise gross proceeds (including any funds standing to the credit of
the Company's escrow account) of at least £150,000,000.

 

 

Redemption Period

 

In accordance with the Company's Articles of Association, holders of Class A
Ordinary Shares in the Company shall have the right to redeem all or a portion
of their Class A Ordinary Shares at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Escrow Account calculated as of
two business days prior to the Merger Effective Time (including interest
earned on the Escrow Account net of taxes payable, and not previously released
to the Company to pay its taxes) divided by the number of then issued Class A
Ordinary Shares in the Company, conditional upon the Business Combination
being approved and consummated.

 

This right of redemption in connection with the Business Combination is in
addition to the opportunity for Public Shareholders in the Company to redeem
their Class A Ordinary Shares if the Company has not completed a business
combination by the Business Combination deadline of 31 December 2023, in a
pre-winding up redemption.

 

This right of redemption in connection with the Business Combination will
apply whether or not a holder votes in favour of the Resolutions at the
General Meeting.

 

Upon completion of the Business Combination, holders of Class A Ordinary
Shares in the Company will be entitled to receive a portion of a 200,000
issuance of new Class A Ordinary Shares in LIU in consideration of them not
exercising their rights of redemption in relation to the Business Combination.

 

Further details on the redemption of Class A Ordinary Shares in the Company
are set out in the Circular.

 

 

Business Combination with LIU

 

Today the Company is proposing to shareholders a business combination with
LIU, an entity which has been formed by certain directors of FAC to effect the
Business Combination and deploy funds into the Lloyd's of London insurance
market. After the Business Combination is effective FAC will become a wholly
owned subsidiary of LIU, with LIU and its subsidiaries together with FAC being
the "Enlarged Group". In connection with, and conditional upon the
consummation of, the Business Combination, LIU is proposing to raise up to
£300 million in a placing of new shares (the "LIU Capital Raise").

 

The Enlarged Group intends over time to target an insurance book comprising
the following three main strategies:

 

(a)  Core Syndicates;

(b)  Innovation and Seed Syndicates; and

(c)  Broad Market Exposure.

 

The Syndicates have been and will be selected by the Enlarged Group with the
intention of achieving differentiated exposure to underwriting risks within
the Lloyd's market and diversification. The board of directors of the Company
(the "Board") and the board of directors of LIU (the "LIU Board") intend that
the Enlarged Group will access Lloyd's market underwriting principally through
London Bridge 2 ("LB2"), an insurance risk transformer vehicle. The board of
directors of LIU plan to deploy capital through two principal channels, being
the establishment and funding of its own corporate Member ("Member") and the
writing of other reinsurance arrangements, as follows:

 

(a)  corporate Lloyd's Member: LIU is in the process of establishing a
wholly-owned corporate Lloyd's Member, LIU Corporate Member Limited ("LLV"),
and a related LB2 cell. LLV has applied to Lloyd's of London to become a
corporate Lloyd's Member and, once its membership has been approved, LLV will
be able to participate, as an underwriting Lloyd's Member, on Syndicates. The
LIU Board intend that LLV will participate on Syndicates with funds at Lloyd's
("FAL") provided through reinsurance arrangements between the corporate
Lloyd's Member and an LB2 cell funded by LIU; and

 

(b)  other reinsurance arrangements: the Enlarged Group intends to establish
further LB2 cells, which it intends to use to support other reinsurance
arrangements through the provision of FAL to a third-party corporate Lloyd's
Member(s) through excess of loss or quota share reinsurance arrangements or
collateralised reinsurance directly to Syndicates.

 

The Business Combination, is the result of an extensive search for potential
opportunities in the insurance or broader financial services industries,
utilising the management team's skills and relationships within the insurance
industry and the Lloyd's of London market in particular.

 

In evaluating the Business Combination, the Board (excluding William Allen and
Andrew Rear, who were excluded from such considerations due to their positions
as directors and shareholders of the Company (as applicable) and also
excluding David Morant due to his appointment as Chief Financial Officer of
the Company with effect from Admission) (such remaining members of the Board,
the "Independent FAC Directors") consulted with their legal counsel, financial
and accounting advisors and other advisors. The Independent FAC Directors
considered a number of factors pertaining to the Business Combination,
including but not limited to, the following factors:

 

The Lloyd's of London insurance market has a strong track record of innovation
and underwriting expertise which LIU intends to access, via LB2. The Company
believes that through the Business Combination, the Enlarged Group can create
an efficient vehicle for investors to access attractive returns in the Lloyd's
of London insurance market without paying significant goodwill or adding
further fee structures.

 

Strong relationships with underwriters and other key figures in the insurance
market: The Company believes that the Enlarged Group's management team, the
LIU Board and the Board have the skills and relationships with some of the
best underwriters in the Lloyd's market to execute the Enlarged Group's
business strategy.

 

·    Attractive underwriting environment. The Lloyd's market has seen
prices rise significantly over the past five years with rates significantly
exceeding claims inflation. The Company and LIU believe that the Enlarged
Group will be able to deploy its capital in a materially efficient manner
under the Lloyd's capital model to pre-identified Syndicates with underwriting
capacity.

 

·    Strong investment returns. The Company and LIU expects the Enlarged
Group to receive significant investment income on premiums received which is
expected to be a strong driver of profitability.

 

·    Limited prior year exposure. By writing the 2024 year of account and
onwards, the Enlarged Group will have limited exposure to prior loss years
which have been developing unfavourably due to higher than expected claims
inflation. Acquiring an existing business operating in the Lloyd's market
could bring substantial reserve risk.

 

 

William Allen, Chief Executive Officer of FAC and Executive Director of LIU
commented:

 

"The board of LIU believe that the current market backdrop presents an
opportunity for a wide range of institutional and retail investors to gain
capital efficient liquid access and diversified exposure to the Lloyd's of
London insurance market. Supported by its highly experienced management team,
LIU will provide investors with access to a diverse portfolio of some of the
best performing syndicates the Lloyd's market offers together with the
opportunity to benefit from fast growing risk classes and broader innovation
across the market."

 

Paul Jardine, Senior Independent Director of the Company commented:

 

"The business combination of FAC with LIU and creation of a London Stock
Exchange main market listed operating company is intended to offer investors
with balanced access to a wide range of syndicates on the Lloyd's market
combined with high standards of corporate governance and transparency. LIU
will offer an investment opportunity to investors whilst also supporting
continued innovation and growth within the Lloyd's market."

 

 

Recommendation

 

The Independent FAC Directors of the Company unanimously consider the approval
of all resolutions set out in the Circular to be in the best interests of the
Company. Accordingly, the Independent FAC Directors recommend that
Shareholders, as applicable, vote in favour of all the Resolutions set out in
the Circular. In doing so, they have received independent financial advice
that the Business Combination is fair and reasonable as far as the Public
Shareholders are concerned.

 

 

Expected Timetable of Principal Events

 

 Event                                                                          Expected time/date (London time)
 Posting of the Circular, Forms of Proxy and Form of Instruction                30 October 2023
 Redemption election through CREST available                                    30 October 2023
 Latest time and date for receipt of Forms of Instruction                       10 a.m. on 9 November 2023
 Latest time and date for receipt of CREST voting instructions                  10 a.m. on 9 November 2023
 Latest time and date for Forms of Proxy                                        10 a.m. on 10 November 2023
 Latest time and date for receipt of redemption requests in respect of Class A  1.00 p.m. on 10 November 2023
 Ordinary Shares
 Record date for redemption of Class A Ordinary Shares                          6.30 p.m. on 10 November 2023
 Voting record date for the General Meeting                                     6.30 p.m. on 10 November 2023
 General Meeting                                                                10 a.m. on 14 November 2023
 Record date for the Business Combination and issue of                          6.30 p.m. on 14 November 2023

 Additional Shares
 Announcement of the result of the General Meeting                              14 November 2023
 Redemption payment date                                                        within five Trading Days of the Business

                                                                                Combination Date
 Business Combination Closing Date                                              15 November 2023
 LIU Admission                                                                  15 November 2023

 

The dates and times above (all of which are London time) are based on the
Company's current expectations and may be subject to change.

 

 

For further information contact

 

FGS Global (Financial PR advisor to Financials Acquisition Corp)

Conor McClafferty / Charlie Chichester / Richard Webster-Smith

+44 20 7251 3801

FINSAC-LON@fgsglobal.com (mailto:FINSAC-LON@fgsglobal.com)

 

UBS (Joint Global Co-ordinator & Joint
Bookrunner)

+44 (0)20 7567 8000

 

HSBC (Joint Global Co-ordinator & Joint
Bookrunner)

+44 (0)20 7991 8888

 

Panmure Gordon (Joint
Bookrunner)

+44 (0) 20 7886 2500

 

Keefe, Bruyette & Woods, a Stifel Company (Joint
Bookrunner)

+44 (0) 20 7663 5400

 

The Growth Stage (Joint
Bookrunner)

+44 (0) 20 3883 4045

 

IMPORTANT LEGAL INFORMATION

 

The contents of this announcement have been prepared by, and are the sole
responsibility of, the Company.

 

The information contained in this announcement is deemed by the Company to
constitute inside information for the purposes of Article 7 of the UK Market
Abuse Regulation. By publication of this announcement via a Regulatory
Information Service, this inside information is now considered to be in the
public domain. The person responsible for arranging the release of this
announcement on behalf of the Company is William Allen, Chief Executive
Officer.

 

These materials may not be published, distributed or transmitted in the United
States, Australia, Canada, Japan, South Africa or any other jurisdiction where
such release, publication or distribution would be unlawful. These materials
do not constitute an offer to sell or an invitation to subscribe for, or the
solicitation of an offer or invitation to buy or subscribe for securities (the
"Securities") of the Company or LIU in any jurisdiction where such an offer or
solicitation is unlawful. The Securities may not be offered or sold in the
United States absent registration or an exemption from registration under the
U.S. Securities Act of 1933, as amended (the "Securities Act"). There will be
no public offering of the Securities in the United States. The Securities have
not been, and will not be, registered under the Securities Act or under the
applicable securities laws of Australia, Canada, Japan or South Africa. The
Securities referred to herein may not be offered or sold in Australia, Canada,
Japan or South Africa or to, or for the account or benefit of, any national,
resident or citizen of Australia, Canada, Japan or South Africa.

 

This publication constitutes neither an offer to sell nor a solicitation to
buy Securities. An investment decision regarding the Securities in LIU should
only be made on the basis of the FCA-approved prospectus, which will be
published in due course by LIU.

 

This announcement is an advertisement and does not constitute a prospectus. In
the United Kingdom, this announcement is only being distributed to, and is
only directed at, "qualified investors", within the meaning of Regulation (EU)
2017/1129 as it forms part of retained EU law as defined in the European Union
(Withdrawal) Act 2018 (as amended), who are also (i) persons having
professional experience in matters relating to investments who fall within the
definition of "investment professionals" in Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended
(the "Order"); (ii) high net worth companies, unincorporated associations and
partnerships and trustees of high value trusts as described in Article 49(2)
of the Order; or (iii) persons to whom it may otherwise lawfully be
communicated (all such persons together being referred to as "Relevant
Persons"). This announcement is directed only at Relevant Persons and must not
be acted on or relied on by persons who are not Relevant Persons. Any
investment or investment activity to which this announcement relates is only
available to Relevant Persons and will be engaged only with Relevant Persons.

 

Neither the Company nor LIU has authorised any offer to the public of
Securities in any Member State of the European Economic Area. With respect to
any Member State of the European Economic Area (each a "Relevant Member
State"), no action has been undertaken or will be undertaken to make an offer
to the public of Securities requiring publication of a prospectus in any
Relevant Member State. As a result, the Securities may only be offered in
Relevant Member States to persons who are "qualified investors" within the
meaning of Article 1(4)(a) and Article 2(e) of Regulation (EU) 2017/1129, as
amended.

 

This announcement may contain forward-looking statements. The forward-looking
statements include, but are not limited to, statements regarding the Company's
or the Directors' expectations, hopes, beliefs, intentions or strategies
regarding the future. In addition, any statement that refers to projections,
forecasts or other characterisations of future events or circumstances,
including any underlying assumptions, is a forward-looking statement. The
words "anticipate", "believe", "continue", "could", "estimate", "expect",
"intend", "may", "might", "plan", "possible", "potential", "predict",
"project", "seek", "should", "would" and similar expressions, or in each case
their negatives, may identify forward-looking statements, but the absence of
these words does not mean that a statement is not forward-looking.

 

Forward-looking statements include all matters that are not historical facts.
Forward-looking statements are based on the current expectations and
assumptions regarding the Company, a Business Combination, the business, the
economy and other future conditions. Because forward-looking statements relate
to the future, by their nature, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict.
Forward-looking statements are not guarantees of future performance and the
Company's actual financial condition, actual results of operations and
financial performance, and the development of the industries in which it
operates or will operate, may differ materially from those made in or
suggested by the forward-looking statements contained in this announcement. In
addition, even if the Company's financial condition, results of operations and
the development of the industries in which it operates or will operate, are
consistent with the forward-looking statements contained in this announcement,
those results or developments may not be indicative of financial condition,
results of operations or developments in subsequent periods. Important factors
that could cause actual results to differ materially from those in the
forward-looking statements include regional, national or global, political,
economic, social, business, technological, competitive, market and regulatory
conditions.

 

Any forward-looking statement contained in this announcement applies only as
of the date of this announcement and is expressly qualified in its entirety by
these cautionary statements. Factors or events that could cause the Company's
actual results to differ may emerge from time to time, and it is not possible
for the Company to predict all of them. Each of the Company, UBS AG London
Branch ("UBS") and HSBC Bank plc ("HSBC", and together with UBS, the "Joint
Global Coordinators"), The Growth Stage Limited ("TGS"), Panmure Gordon (UK)
Limited ("Panmure") and Stifel Nicolaus Europe Limited (trading as Keefe,
Bruyette & Woods) ("KBW", and together with the Joint Global Coordinators,
TGS and Panmure, the "Banks") and their respective affiliates as defined under
Rule 501(b) of Regulation D of the Securities Act ("affiliates"), expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained in this announcement to
reflect any change in its expectations or any change in events, conditions or
circumstances on which any forward-looking statement contained in this
announcement is based, unless required to do so by applicable law, the
Prospectus Regulation Rules, the Listing Rules, the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority ("FCA") or the UK Market
Abuse Regulation.

 

Each of the Banks and, except as required by applicable law, the Company
expressly disclaim any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained in this
announcement to reflect any change in its expectations or any change in
events, conditions or circumstances on which any forward-looking statement
contained in this announcement is based.

None of the Banks, nor any of their respective subsidiaries, holding
companies, branches or affiliates nor any of their respective directors,
officers, employees, agents or advisers owes or accepts any duty,
responsibility or liability whatsoever (whether direct or indirect and whether
arising in contract, in tort, under statute or otherwise) to any person in
relation to this announcement or for any acts or omissions of the Company, and
no representation or warranty, express or implied, is made by any of them as
to the contents of this announcement, including its accuracy, completeness,
verification or sufficiency, or for any other statement made or purported to
be made by the Company, or on its behalf, or by any of the Banks, or on their
behalf, in connection with the Company, LIU, nor any of their respective
subsidiaries or associated companies, and nothing in this announcement should
be relied upon as a promise or representation in this respect, whether or not
to the past or future. To the fullest extent permitted by law, each of the
Banks and their respective subsidiaries, holding companies, branches and
affiliates and their respective directors, officers, employees, agents, or
advisers accordingly disclaim all and any responsibility or liability
whatsoever (whether direct or indirect and whether arising in tort, contract,
under statute or otherwise), which they might otherwise have in respect of
this announcement.

UBS is authorised and regulated by the Financial Market Supervisory Authority
in Switzerland. It is authorised by the Prudential Regulation Authority
("PRA") and subject to regulation by the FCA and limited regulation by the PRA
in the United Kingdom.

HSBC is authorised by the Prudential Regulation Authority and regulated in the
United Kingdom by the Financial Conduct Authority and the Prudential
Regulation Authority.

Each of Panmure, KBW and TGS is authorised and regulated in the United Kingdom
by the FCA.

Each of the Banks are acting exclusively for the Company in connection with
the process or contents of this announcement. In connection with such matters,
each of the Banks will not regard any other person as its client, nor will it
be responsible to any other person for providing the protections afforded to
its clients or for providing advice in relation to the process, contents of
this announcement or any other matter referred to herein.

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