CBL readies for IPO and stockmarket listing

MEDIA RELEASE

7 SEPTEMBER, 2015

CBL readies for IPO and stockmarket listing

A provider of credit surety and financial risk insurance is set to become New Zealand’s newest listed company.

Auckland-based CBL Corporation Ltd (“CBL”), parent company of the insurance group established in 1973, today registered its Product Disclosure Statement with regulators on both sides of the Tasman in preparation for listing on the NZX Main Board and ASX via an initial public offering of its ordinary shares.

CBL chairman Sir John Wells said the offer is being made to institutional investors in New Zealand, Australia and overseas, and to retail investors in New Zealand. There is also a priority pool for CBL employees worldwide, and close business associates. The offer is expected to raise between $123 million and $132 million, based on an indicative price range of $1.45 to $1.85 per share and an implied market capitalisation of between $324 million and $389 million for the company.

CBL’s current majority shareholders and senior management intend to retain substantial shareholdings following the completion of the Offer, and only intend to sell up to 15 percent of their aggregate current pre-offer shares.

Sir John said listing would increase CBL’s profile and broaden its investor base. Money raised in the IPO would largely be used to fund growth, including the acquisition of Australian insurer Assetinsure, and to increase CBL’s regulatory capital capacity.

Sir John said CBL had expanded significantly over the past 15 years.

“CBL has a track record of successfully growing its business by focusing on profitable, non-traditional insurance lines in specific markets,” Sir John said.

“In 2000, with one employee, the Group wrote NZ$2m in gross premium revenue. Today, CBL employs more than 100 staff in eight international offices, writing business in 25 countries on four continents, and is forecasting gross premium revenue in excess of NZ$330m this year on a pro forma basis.”

“Our continued growth in both revenue and operating profit is testament to the strength of the international network we have built up; we have identified several opportunities for further growth and development, and the money we raise from this offer will help us take advantage of those opportunities,” Sir John said.

CBL managing director Peter Harris said the company believes it has adopted a consistent, conservative approach to developing its credit and financial surety business, concentrating on areas in which it had specialist expertise, notably the building, contracting, and construction sectors.

“As a specialised insurer in a small country, CBL has had to take its products and expertise to international markets to scale up its business, and has become a considerable exporter of financial services,” said Mr Harris.

Mr Harris said CBL now derives close to 98 percent of its gross revenue from its international operations, – largely from Europe where CBL has a number of long term and close business relationships.

“We believe much of our success is down to the long term relationships we have developed with partners and distributors around the world, many of whom have done business with CBL for 10 years or more,” said Mr Harris.

CBL has focused on its underwriting profit, rather than gross revenue, and sought to avoid what it sees as competitive, low margin “commodity” insurance that some other insurers write.

Mr Harris said CBL’s strong underwriting performance had been recognised in US-based rating agency A.M. Best’s upgrade of the company’s financial strength and issuer credit ratings earlier this year.

A.M. Best, which specialises in the insurance industry, upgraded CBL's international financial strength rating to B++ (Good), with an Outlook of 'Stable', and upgraded its issuer credit rating to bbb with an Outlook of 'Stable'.

CBL reported another record result for the financial year ending December 2014, with operating profit before tax growing by 38 percent to NZ$36 million, on gross written premium of approximately NZ$240 million.

Mr Harris noted that CBL’s results for the past financial year had been achieved despite the strength of the New Zealand dollar during that period.

“While we leave premiums in the currencies in which they are earned in order to minimise currency risk, we are required to express all figures in New Zealand dollars when producing our financial statements. That makes our 2014 results even more satisfying, and, in our view, further demonstrates the underlying strength of our business.”

Mr Harris said he expected the recent weakening of the New Zealand dollar, and its medium term outlook, to positively affect CBL’s bottom line.

CBL expects to maintain positive growth in the coming years, with the Product Disclosure Statement forecasting growth in net profit after tax of 51% for the year to 31 December 2015 (on a pro-forma basis) and a further 38% for the year to 31 December 2016 on gross written premium of $335 million and $397 million respectively.

Key dates

PDS lodged 7 September 2015

Priority Offer Opening Date 7 September 2015

Priority Offer Closing Date 14 September 2015

Bookbuild 17 September 2015

Pricing and Allocation 17 September 2015

Broker Firm Offer Opening Date 21 September 2015

Broker Firm Offer Closing Date 6 October 2015

Settlement of Shares to be quoted on ASX 9 October 2015

Settlement of Shares to be quoted on NZX 12 October 2015

Allotment of Shares to be quoted on NZX and ASX 12 October 2015

Expected commencement of trading on the NZX Main Board and ASX* 13 October 2015

Expected dispatch of holding statements by 19 October 2015

Expected payment of first dividend April 2016

*Trading on ASX (which will initially be on a deferred settlement basis) will not be on a normal ('T+3') settlement basis until after the dispatch of holding statements. Each of ASX, CBL, CBLNZ, the Joint Lead Managers and the Share Registrar disclaim all liability, whether in negligence or otherwise, to persons who trade Offer Shares before receiving their holding statements.

This timetable is indicative only and the dates may change. CBL, in conjunction with the Joint Lead Managers, reserves the right to vary or extend these dates. CBL may also withdraw the Offer at any time before the Allotment Date or accept late Applications (either generally or in individual cases).

CBL has been advised by Bancorp and by Minter Ellison Rudd Watts throughout the IPO process; Joint Lead Managers to the offer are UBS and Forsyth Barr.

For more information, visit CBL’s website, www.cblcorporation.co.nz

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