GlobalCapital postpones €15 million rights issue

The insurance specialist GlobalCapital has decided to postpone a €15 million rights issue.

In a company statement, the board said it was in the best interest of shareholders that the proposed rights issue is postponed until such as time as capital plans for a new business strategy are “adequately defined”.

GlobalCapital made reference to new regulatory changes in the offing with the Insurance Distribution Directive in the course of 2018.

“During the last quarter of 2017 the company continued the process of redefining its business strategy in the context of its plans to strengthen its position in the local insurance market and to passport its insurance products in other EU jurisdictions, while at the same time preparing itself for the implementation of the Insurance Distribution Directive in the course of 2018.

“The redefinition of the company’s business strategy, which is expected to be finalised in the first half of 2018, is likely to affect the company’s optimum capital levels. As a result, the board has decided that it is in the best interests of the company and its shareholders as a whole to postpone the proposed rights issue until such time as the capital plans underpinning its renewed business strategy have been adequately defined in the light of the evolving business and regulatory environment.”

GlobalCapital said it would return to the rights issue throughout 2018 to raise such amount of capital “as may be determined to be appropriate by the board”.

In 2016, the company secured the necessary finance in a €10 million bond issue to pay off a previous bond maturity. The company had then intended to finance the bond repayment from an injection of fresh capital through a €15 million rights issue to shareholders.

In 2015 the company was rocked by the appointment of conservators for its main shareholder, British American Insurance of Mauritius (BAI), which holds 48.5% of GlobalCapital’s shares. GlobalCapital’s former chairman, Dawood Rawat, was forced to resign after Mauritian authorities accused him of running a €960 million Ponzi scheme.

Italian banker Paolo Catalfamo, an honorary consul-general for Mauritius in Italy, announced that his company EIP plc – later Investar – would acquire BAI’s entire shareholding.

In March 2016, the group generated €4.7 million through a rights issue offer following which Investar plc became the majority shareholder of the company with a 52.6% shareholding.