Steadfast seeks $334m

Insurance broker Steadfast Group is seeking to raise $334 million from investors before its float next month, with its network of brokers set to hold about 40 per cent of stock.

By InvestSMART · 12 Jul 2013

By InvestSMART ·
12 Jul 2013

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Insurance broker Steadfast Group is seeking to raise $334 million from investors before its float next month, with its network of brokers set to hold about 40 per cent of stock.

The final prospectus, filed on Thursday night, shows Steadfast will issue 278 million to 334 million new shares priced between $1 and $1.20.

The company, which is taking equity stakes in 62 broking businesses before its listing, is also issuing 135.3 million shares to its broker network as payment and 65.2 million as part of a pre-float restructure of its business.

All up, chairman Frank O'Halloran said, the brokers would hold 37 to 41 per cent of stock, and directors would hold 3 per cent.

The brokers join forces to negotiate insurance rates with underwriters then sell the policies.

The brokers' stock will be held in escrow until September 2014.

The prospectus said the arrangements may limit the price of the shares, which could also be dragged down if there was any attempted sell-down once the shares were no longer in escrow.

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Frequently Asked Questions about this Article…

How much is Steadfast Group seeking to raise in its IPO?

Steadfast Group is seeking to raise $334 million from investors ahead of its float next month, according to the company's final prospectus.

How many new shares is Steadfast offering and what is the share price range?

The prospectus shows Steadfast will issue between 278 million and 334 million new shares, with a proposed price range of $1.00 to $1.20 per share.

What stake will Steadfast's broker network and directors hold after the float?

Steadfast says its broker network will hold roughly 37% to 41% of the company’s stock after listing, while company directors will hold about 3%.

Why are brokers being issued so many shares in the Steadfast float?

Steadfast is taking equity stakes in 62 broking businesses ahead of the listing and is issuing shares as part of that arrangement — 135.3 million shares to the broker network as payment and a further 65.2 million shares as part of a pre‑float restructure.

What does it mean that brokers' shares will be held in escrow until September 2014?

Brokers’ shares will be held in escrow until September 2014, which means those shares won’t be tradable until that date and remain locked up under the escrow arrangements specified in the prospectus.

Could the escrow and broker arrangements affect Steadfast’s share price?

Yes. The prospectus warns the broker arrangements may limit the share price, and the share price could be dragged down if there is any attempted sell‑down once the escrow period ends.

What is Steadfast’s business model and how do its brokers operate?

Steadfast’s broker network joins forces to negotiate insurance rates with underwriters and then sells the insurance policies — a model that underpins the company’s operations and the rationale for issuing equity to brokers.

Are there any immediate investor considerations mentioned in the prospectus?

The prospectus highlights the large block of shares being issued to brokers, the escrow until September 2014, and the potential for those arrangements to constrain or negatively impact the share price if significant sell‑downs occur after escrow.