By Lee Spears and Noah Buhayar
Billionaire hedge-fund manager Daniel Loeb's Third Point Reinsurance Ltd., which has no staff in the United States, said it can limit financial disclosure after a public offering because of rules promoting domestic job creation.
Third Point Reinsurance is an “emerging growth company” under the Jumpstart Our Business Startups--or JOBS--Act (Pub. L. No. 112-106), according to filings for the planned initial public offering. Under the act, companies with less than $1 billion in annual revenue can qualify, allowing reduced disclosure about executive pay and waiving requirements for auditors to attest to a company's financial controls.
“Was this anticipated by the JOBS Act? Well, not if you paid attention to the rhetoric we heard.”
Barry Ritholtz of FusionIQ
“This was all about small companies and startups, not wealthy hedge-fund managers,” Ritholtz said in a telephone interview. “Was this anticipated by the JOBS Act? Well, not if you paid attention to the rhetoric we heard.”
Rob Bredahl, the reinsurer's chief financial officer, did not respond to messages by phone and email seeking comment about plans for hiring or financial disclosure. Elissa Doyle, a managing director at Loeb's Third Point LLC hedge fund, declined to comment.
Loeb's reinsurer does not plan to use all the special treatment available in the JOBS Act. It opted out of the ability to be exempt from future revisions of public-company accounting standards, according to filings.
Third Point Reinsurance kept its initial draft IPO prospectus confidential in May while the Securities and Exchange Commission reviewed it. Such confidentiality is permitted for emerging growth companies under the JOBS Act, and contrasts with the usual approach of larger U.S. IPOs.
A revised Third Point Reinsurance filing and the first draft were made public in July.
“We cannot predict whether investors will find our common shares less attractive if we choose to rely on one or more of these exemptions or if our decision to avail ourselves of the reduced requirements may make it more difficult for investors and securities analysts to evaluate our company,” Third Point Reinsurance said in a filing.
The reinsurer said it may qualify as an emerging growth company until as late as the end of 2018. Obama said the act was designed to make it easier for companies to get funding.
“Going public is a major step towards expanding and hiring more workers,” Obama said in April 2012 as he signed the JOBS Act. “Our job is to help our companies grow and hire. That's why I pushed for this bill.”
Sixteen of Third Point Reinsurance's 17 employees were based in Bermuda, and the other was in the United Kingdom as of Aug. 5, according to the prospectus. The reinsurer had revenue of $232.9 million in the 12 months through Dec. 31, regulatory filings show.
Reinsurers take part of the risks written by insurers, which limits the need for sales staff and claims-management personnel.
“In writing the law, there's always a trade-off between narrowly targeting some special interest group or having it more broad. The JOBS Act is generally in that more- broad category.”
Greenlight Capital Re Ltd., which counts hedge fund manager David Einhorn as its chairman, said in a 2007 registration statement that it ended the prior year with nine employees, all in the Cayman Islands. The count climbed to 26 at the end of 2012, with 22 in the Cayman Islands and 4 in Dublin.
Loeb, Einhorn, Steven A. Cohen of SAC Capital Advisors LP, and billionaire John Paulson have set up reinsurers in Bermuda and the Cayman Islands to invest premiums. The ventures provide a pool of capital for the hedge fund managers that can be less subject to redemption.
Manchester United Plc, the English soccer club that is more than a century old, also invoked the JOBS Act while based outside the United States. The team registered for its August 2012 IPO as an emerging growth company and raised about $233 million in the sale, filings and data compiled by Bloomberg show. Revenue was about 320 million pounds ($507 million) in the year ended June 30, 2012.
Of 62 IPOs completed in the United States in the second quarter, 77 percent were by emerging growth companies, according to PricewaterhouseCoopers LLP.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)