Herbert Smith Freehills (HSF) and US firm Kramer Levin Naftalis & Frankel have teamed up ahead of their merger next month to advise Third Point Investors Limited (TPIL) on its proposed all-share combination with Malibu Life Reinsurance and re-IPO. 

Willkie Farr & Gallagher and Latham & Watkins are also acting in the deal, which marks the first reinsurance IPO in London since 2020. Willkie is guiding Malibu while Latham is advising Jefferies, which is acting as sponsor under the UK Listing Rules. 

HSF’s team on the deal was led by London corporate partners Tim West and Michael Jacobs, together with funds partner Shantanu Naravane, equity capital markets partner Sarah Ries-Coward, corporate insurance M&A partner Grant Murtagh, US securities partner Dinesh Banani and equity capital markets of counsel Thomas Vaughan. 

They worked alongside Kramer Levin corporate partners Ernie Wechsler, Christian Witkze and Dan Rabinowitz, all of whom are based in New York. 

The transatlantic Willkie team was led by partners David Griffiths (corporate and financial services) and Russell Leaf (M&A). It included partners Sean Ewen (corporate and financial services), Mark Vandehaar (asset management), Russell Pinilis (tax) and Jennifer Tait (capital markets).

TPIL has served since 2007 as a listed feeder fund to Third Point, the flagship New York hedge fund of billionaire activist investor Daniel Loeb. The combination with Malibu follows years of criticism from institutional investors and activist peers about TPIL’s valuation discount to Third Point.

Malibu, which focuses on the US fixed annuity market, was launched by Loeb last year. The combination marks a fundamental pivot for TPIL, changing it from an investment trust into an operating holding company focused on insurance and credit-linked strategies. The company is expected to be fast-growing, with TPIL saying it would target mid-teens return on equity by the end of 2027.

TPIL noted Malibu was an established reinsurance platform within the “estimated $1trn and growing fixed annuity market in the US”. 

The merger is structured on a ‘NAV for NAV’ basis, with Malibu receiving new shares in TPIL. Expected in the third quarter, it constitutes a reverse takeover under UK listing rules and TPIL will convene an extraordinary general meeting to seek the required level of shareholder approval.

Given Loeb’s high ownership stake, however, approval is viewed as a formality. Nevertheless, TPIL is planning a tender offer of at least $75m to give existing shareholders an option to exit at more favourable terms than current market pricing. 

HSF’s merger with Kramer Levin will create a firm with revenue of more than $2bn when it goes live on 1 June, moving legacy HSF into the global top 20 from its current place in the AmLaw ranking of 34. The deal will hand HSF the sizeable US footprint so desired by large non-US firms.