Benzinga | Jul 15, 2021 09:12AM EDT

Enstar Announces 2 Transactions With Hillhouse For Totals Of $879.3M And $228.7M

Enstar Group Limited (NASDAQ:ESGR) announced today that it has entered into an agreement to repurchase an aggregate of 3,749,400 ordinary shares of Enstar held by funds managed by Hillhouse Capital Management ("Hillhouse") for a price of $234.52 per share, totaling $879.3 million in aggregate, a discount to book value. The shares represent the Hillhouse funds' entire interest in Enstar, which constitutes 16.9% of total ordinary shares and 9.4% of voting ordinary shares. The transaction is expected to close on or about July 21, 2021, subject to satisfaction of customary closing conditions.

On the same day, Enstar's wholly owned subsidiary agreed to purchase a Hillhouse affiliate's entire 27.7% interest in Enhanzed Reinsurance Ltd. ("Enhanzed Re") for an estimated purchase price of $228.7 million. The purchase price is based on 90% of Enhanzed Re's estimated total shareholders' equity as of June 30, 2021 and is subject to adjustment to reflect the finalization of the Enhanzed Re balance sheet as of such date.

After the purchase of the Enhanzed Re shares from the Hillhouse affiliate, Enstar's equity interest in the Bermuda-based reinsurer will increase from 47.4% to 75.1%, with joint venture partner, Allianz SE, continuing to own the remaining 24.9%. Closing of this transaction is subject to satisfaction of customary conditions, including approval by the Bermuda Monetary Authority, and is expected to occur by the fourth quarter of 2021.

Enstar intends to fund the purchases under both the agreements using cash on hand and liquidity available under its revolving credit facility. Enstar's previously announced share buyback program has been terminated.

Dominic Silvester, Enstar's Chief Executive Officer, said: "We view these transactions as a compelling opportunity for Enstar to deploy capital strategically to repurchase shares at a discount to book value and to acquire control of the Enhanzed Re platform on terms expected to be accretive to Enstar."

Mr. Silvester continued, "Following completion of the share repurchase and the acquisition of Enhanzed Re, Enstar will maintain a strong capital and liquidity position, allowing us to continue to pursue future run-off transactions. In 2021 we have already completed a record amount of transactions in terms of size, and we continue to see a healthy legacy pipeline."

The Hillhouse funds originally acquired Enstar shares in 2016 from Goldman Sachs, acquiring additional shares in an exchange transaction with Enstar in 2018.