An introduction to the Kairos Acquisition(NASDAQ: KAIR) Corporation
The SPAC sector is an attractive process for many different businesses that are looking to enter the open markets. The KAIR SPAC aims to direct its blank check towards the Insurance and Tech sector. Better known as InsurTech, this rapidly developing industry has shown some fantastic growth in the past few years.
Going through an impressive $200 million IPO In December 2020, units recently split to a lukewarm response. The units hit the markets with a standard $10 unit composing of a single share and a half warrant. Although half warrants aren’t necessarily a sign of bad things to come, they certainly do not instil investor confidence.
Assembling a decent team and entering a particularly interesting sector with a sizeable blank check leaves some golden opportunities in store for the team at Kairos Acquisition. But investors are desperate for more information!
Sponsor Background & Context
The official listed sponsor is Kairos Alpha Acquisition LLC with HS Chronos LLC also committing to purchase shares at a later date. The sole underwriter of the transaction is set to be Citigroup. Although I-Bankers Securities is operating within the capacity of Co-Manager. The true deal flow of sponsorship can be seen through the involvement of Hudson Structures Capital Management and one of its founders, Vikas Singhal.
Although maintain a mere Director position within the KAIR SPAC. Mr Vikas Singhal is also a partner at Hudson Structured Capital Management Ltd. The lead sponsor behind the KAIR SPAC. It is safe to say that the acquisition company was spearheaded by Mr Singhal.
At Hudson, Mr Vishkals primary focus in the Reinsurance Strategy Department and the Insurtech Strategy. Previously, Mr Singhal was a partner at Gracie Point, a speciality finance and insurance company he helped to start. Last securing $50 million in financing in early 2020, perhaps this is the company that the KAIR SPAC has in its sights?
Prior to Gracie Point, Mr Singhal focused on financial insurance strategies at Concord Capital Management (2004-2010). Following the beginning of his careers at UBS Investment Bank in 2002.
Hudson structures is an incredibly powerful and highly successful firm. It has an unbelievably large team due to the sheer scope of the company. Hudson has expanded and specializes primarily in the Reinsurance and Transporation sectors, both of which operate as relatively separate entities.
The firm actually manages its very own independent research facilities and is able to predict and foresee solid market trends long before traditional data analytics is able to see them.
It is clear to see that a firm with such a strong focus that lies within the interests of the KAIR SPAC would be able to identify some very lucrative and appropriate targets. However, the ability to generate post-deal value and a successful merger process shall lie upon the assembled team.
The CEO of the KAIR SPAC brings over 25 years from the investment, financial services and fintech sector. With a large array of experience within global capital markets with a particular focus on M&A transactions. Currently sitting as the Managing Director of ERG Capital Partners. This investment bank has a strong tie with the London-based Eden Rock Merchant bank.
Prior to that, Mr Bang sat as the Managing Director of GCA Advisors (2014-2018), where he gathered a large amount of experience in regards to M&A, even assisting in the raising capital for both the FinTech and InsurTech sectors.
Mr Bang has seen almost every aspect of the InsurTech field from a corporate point of the field. Having overseen multiple M&A processes, financial transactions and even capital raising. Although he lacks experience in the SPAC sector, it should be noted that as Managing Director at Keefe, Bruyette & Woods (2003-2014) he guided the companies successful IPO and ultimate sale to Stifel Financial.
Jerry De St. Paer
The CFO of the KAIR SPAC is no fresh face to the Insurance Industry and the complex financial operations behind them. Supported by over 30 years of relevant experience, Mr Paer has held and currently holds a variety of executive-level positions in a number of insurance sector companies, both private and public.
The following is a select list of his highly relevant and applicable career:
- XL Capital Ltd (then NYSE: XL) – Executive Vice President and Chief Financial Officer
- JP Morgan – Managing Director in insurance investment banking
- Equitable Financial Companies (NYSE: EQ) – Senior Vice President and Chief Financial Officer
- Alliance Capital Management – managed IPO’s
Currently sitting as a managing member of REG Consulting LLC. This financial advisory company is aimed at high growth businesses in the financial services industry. With a strong focus on the reinsurance sector as of 2015. The addition of Mr Glanville appears to be that in the creation of post-deal value and his experience through REG seems perfect in looking to scale and growth the potential target.
No fresh face to the InsurTech industry, Mr Glanville was an early investor in Pie Insurance, this industry-dominating company aimed at small business workers and compensation insurance. Also sitting as a founding partner and Managing Director of Pine Brook Road Partners. Where he identified a number of successful investments across the reinsurance sector.
Mr Glanville clearly has a fantastic eye for potential targets within the reinsurance industry. Although his past experience with companies extends across both the public and private sector. His VC and investment experience is primarily focused on companies too small for the $200 million Blank Check that the KAIR SPAC is offering.
With over 26 years within the commercial insurance sector and 24 years as a senior executive. Mr Koehn is certainly no stranger to the insurance game. Holding Partner and Senior Management positions with the likes of Tri-City Brokerage, Bisys, Crump, and CRC Group.
Overseeing multiple corporate operations ranging from capital raising, sales, purchases, M&A, amongst others. Since then, he has evolved into a startup advisor and investor within the FinTech and InsurTech sector. The KAIR SPAC seems to be the natural progression of this trend.
Within the startup space, Mr Koehn was a Managing Partner at the Batchery Incubator from 2015 to 2016. Currently operating in more of an advisor and mentor position for 500 Startups, Lloyd’s Lab in London, Barcelona Ventures, and Brown University Lab. As well as a panel member for Funders Club Venture Capital.
Mr Garrett Koehn is a tried and tested VC that is no stranger in identifying suitable targets.
Sitting as the CEO of Soncy Associates since 2006. Mr Lummis manages a private investment portfolio with a focus on early-stage insurance businesses. It is through these indexes that the potential KAIR SPAC is most likely to appear from.
Primarily sitting in multiple advisory positions for both Insurance companies and Venture Capitalist firms. Attaining the CEO position of AQR Re (2013-2015), a manager of portfolios of reinsurance and insurance-linked securities. As well as the COO of Renaissance Re Holdings Ltd (2004-2006), a reinsurance company. The Vice President at USF&G, an insurance holding company from 1991-1997.
An extremely confident and accomplished member of the insurance industry from the ’90s. Mr Lummis has seen and successfully navigated the shifting landscape of the industry.
Mr Motamed brings incredibly deep experience in the insurance industry, risk management and management of insurance organizations. Currently sitting as a board member of the American International Group, Inc. (NYSE: AIG) as of 2019. Previously holding the Chairman and CEO position of CNA Financial Corporation, an insurance holding company (2009-2016).
More relevant to the InsurTech sector is his relation to Verisk Analytics. This data analytics and risk assessment firm embodies the future of the InsurTech industry and is a great indication of the potential targets that the KAIR SPAC is seeking to identify.
Susan J. Sutherland
Ms Sutherland brings with her an incredible level of executive-tier experience from the Insurance industry. Currently sitting as the Director of Ascot Group Limited. This portfolio company specializes in property, casualty insurance and reinsurance.
Ms Sutherland has an extensive history with the property, casualty insurance and reinsurance fields. Maintaining the Directorship in both Montpelier Re Holdings (2013-2015) as well as Hagerty Holding Corp. (2015-2018). Her early experience practising law pales in comparison to the 30 years of advising U.S. and international insurance and reinsurance companies.
Targeted Sector & Market Criteria
The clear focus of the KAIR SPAC is the Insurance, InsurTech and Reinsurance sector. Although somewhat established, the sector has seen nothing but incredible growth across the past few years. And with heavier and heavier integration with tech, alongside the booming Medical sector, this is one of those niche sectors that is yet to be saturated with SPACs and likely targets.
The size and sponsor history of the is reflected in the aversion for start-up companies, companies with speculative business plans or companies that are excessively leveraged (unless the publicly-traded small-cap option is there). The following is a narrowed list within the Insurance and InsurTech sector that the KAIR SPAC is looking at:
- Insurance and/or reinsurance carriers
- Distribution companies
- Service providers
- InsurTech companies
Deal Flow Analysis
Hudson Structured Capital Management is a highly successful firm with a very long and rich history. When considering the total amount of assets under management, the firm currently maintains around $2.5 Billion. This large sum is directed through a number of limited partnerships.
Largely focused on the transportation sector with many recent investments into the Maritime subsector in particular. Most recently, “HSCM Bermuda Insurtech Fund LP,” allocated $10.9 Million towards the InsurTech industry. Clearly a sign of the company’s increased interest towards taking a more active hand in the insurance and tech industry.
Hudson Structured does have a decent level of experience as an investor. It was clear to see from the Series B and Series A investment rounds that the company does not look to mess around with early-stage fledgeling companies. The size of investments ranges from $20 million and larger.
Of these investments, the company has held the lead investment position 7 times. Most recently taking a dominating stake in Corvus Insurance(AI-Driven Smart Insurance) during its Series C for $100 million. However, the most relevant consideration in the Hudson Structured Investment portfolio is that of Gracie Point.
Gracie Point saw Vikas Singhal (KAIR SPAC) as a partner and founder from 2010 to 2016. The company uses quality technology in order to identify speciality life insurance packages as well as a variety of loan packages. The company has been performing successfully and has successfully grown since a $50 million investment from Hudson in January 2020. Could Gracie Point be considering an entrance into the public markets?
KAIR SPAC In Summary…
The KAIR SPAC certainly seems to have all its affairs in order. Having identified a pretty appropriate sector of the market and a reasonably sized amount to invest through the SPAC process.
It’s an impressive line up, which is really one of the main selling features of SPAC investment vehicles.Steve Evans – Artemis – 2020
Although a fantastic team with close affiliations to the InsurTech and Reinsurance industry, the lack of SPAC and Acquisition corporation experience from the team is certainly noticeable. However, the KAIR SPAC has definitely done its homework and appears to be adequately prepared for identifying a target, the merger process and the generation of Post Deal Value.
The Kairos Acquisition Corporation seems like a sure thing. The chances of failure may be minimal, but you’re always better off getting insurance!