Third Point Investors (TPOU) has announced an all-share deal to acquire Malibu Life Reinsurance SPC (Malibu), marking a significant strategic pivot towards becoming what it describes a fast-growing, fully capitalised reinsurance operating company listed in London. The proposed acquisition – structured on a “NAV for NAV” basis – will see TPOU issue new ordinary shares to acquire Malibu from its parent, which is wholly owned by Third Point Opportunities Master Fund. The deal follows a comprehensive strategy review and has the unanimous backing of the company’s strategy committee. However, as discussed below, it is clear from a statement issued by AVI this morning that, while some shareholders have given the transaction their blessing, this proposal does not have the backing of all of its significant shareholders and AVI is encouraging other shareholders to vote against the deal.
Strategic rationale
TPOU says that the transaction aims to address structural headwinds facing the investment trust sector by allowing it to transition from a fund-of-funds model to a pure-play operating company focused on the growing US fixed annuity reinsurance market. Malibu targets scaling to US$5bn in annual premiums and delivering mid-teens return on equity by 2027, supported by what TPOU describes as an efficient, spread-based model and existing investment from Third Point.
Malibu’s leadership includes Gary Dombowsky, co-founder and former CEO of Knighthead Annuity, who will become CEO of the combined group post-completion. The company expects the transaction to unlock re-rating potential, bringing TPOU’s valuation more in line with US-listed peers that typically trade at or above book value.
Tender offer for liquidity
To accommodate investors seeking an exit, a potential tender offer of at least $75m is under consideration. Third Point and other investors have conditionally committed $55m to support the tender, which would be priced at a 12.5% discount to NAV. Importantly, Third Point (which owns around 25% of shares) has undertaken not to participate.
Governance and next steps
The acquisition constitutes a reverse takeover under UK Listing Rules. An EGM will be convened in due course to seek shareholder approval, with a circular expected in June. Upon completion – which TPOU says is expected in the third quarter of 2025 – it will cancel its current listing and re-admit its shares to the commercial companies category.
Key shareholders, including directors and Saba Capital, have indicated support for the deal, which values Malibu at approximately $68m, including a recent $16m equity injection by Third Point.
Chairman Rupert Dorey described the transaction as “innovative and transformational,” with the potential to deliver improved returns and a stronger valuation. Strategy Committee Chair Dimitri Goulandris will assume chairmanship of the new business.
AVI’s view – Third Point Investors “the poster child for appalling corporate governance”
AVI, which owns a 7.1% stake in TPOU, has issued a statement in response to TPOU’s proposed transaction in which it doesn’t mince its words. This is what AVI has to say about the proposed deal:
“Third Point Investors (TPOU) has for some time been the poster child for appalling corporate governance and today’s announcement of an odious related-party deal thoroughly cements that well-deserved reputation. Long suffering shareholders who’ve endured the Manager’s persistent record of underperformance now face being dragged into Third Point’s latest costly misadventure into insurance, noting that Third Point Reinsurance (now rebranded as SiriusPoint) has delivered a shareholder total return of less than 4% annualised since its creation in 2013, woefully underperforming peers and market indices.
“We do not see how any Board, claiming to act independently, could conclude that such fundamental changes to the company should not involve shareholders being offered a full exit at NAV. Why should they be forced into Dan Loeb’s (15-years-late-to-the-party) vanity project attempt to ape Apollo?
“Compounding this governance horror-show, we note the Chairman of the Strategy Committee that has recommended this transaction to the Board, will be chairing the new business.
“That Jefferies, a hitherto well-respected constituent of the London-listed investment companies sector, should endorse this transaction in their role as adviser raises unfortunate questions as whether the close professional and personal relationship between its CEO and Dan Loeb played a part in this otherwise unfathomable misplacement of their moral and ethical compass.
“We’ll be voting against this proposal and urge other shareholders to do likewise.”
[QD comment MR: The proposals to pivot Third Point Investors into a listed reinsurance operating company via the acquisition of Malibu Life Re has clearly divided opinion. On the one hand, the board and strategy committee – chaired by Dimitri Goulandris, who will lead the new business – are presenting this as a bold solution to the structural challenges facing the broader investment trust sector, one that positions the company for growth and re-rating potential.
However, the response from AVI, a 7.1% shareholder, is scathing and draws attention to a lack of transparency in TPOU’s structure and that long-term performance is decidedly lacklustre. AVI clearly has significant concerns over shareholder treatment, board independence, and past reinsurance ventures involving Third Point. The fact that the chairman of the strategy committee will chair the new business is unlikely to ease those concerns. Given that this is a radical direction for the fund, we agree with AVI that investors should be offered an exit at asset value.
With the deal structured as a reverse takeover and requiring shareholder approval, this is shaping up to be a decisive moment for TPOU and its shareholders, who will now have to weigh the promise of future re-rating and returns against the risks of governance erosion and strategic drift. We think AVI will be vocal in its dissent and could be a lightning rod for other disgruntled shareholders. This vote will be one to watch closely.]
