Co-Mandated to raise US$50 Million for a US Insurer: Inside Our Underwriting Process
Langdon Capital has been co-mandated, alongside our US partner firm, to raise US$50 million for a US insurance business. The capital will be used for regulatory capital, the expansion of operations and the next phase of scaling.
The mandate is a useful illustration of the underwriting we carry out before we agree to take a client to market.
Our underwriting process
When a prospective client approaches us to raise capital, we run our own underwriting process. We look for a defined set of investible characteristics in the business, the features we know would satisfy the mandate of at least one subset of our institutional investor base. In practice, we reduce the decision to a single question: would this business or transaction meet the investment criteria of at least one pocket of our institutional investor base?
If we are not certain of the answer, we simply ask. On a no-names basis, we put the opportunity to the investors most likely to fund it, because we hold direct market access at the most senior decision-maker levels. That access means we can test appetite in hours rather than weeks, and take on only those mandates we have genuine confidence we can deliver.
Access across the entire capital stack
We speak with decision-makers at institutional investors every day. Between them, these funds provide capital solutions across the entire capital stack, including senior debt, unitranche facilities, mezzanine debt, turnaround and special situations capital, and equity. Because we can match a potential mandate to the right layer of that stack, we are not limited to a single type of solution: we structure the capital raise around what the business actually needs and what the market will support. We must see alignment before we proceed.
Why this deal met our criteria
In this instance, several characteristics stood out. The business model is genuinely disruptive. The founding team is exceptional, comprising former Fortune 500 chief executives who have backed their conviction with their own money, personally investing more than US$3 million and funding our engagement fees themselves.
That degree of personal commitment signals a deep alignment of interests between the founders, our investors and us. The company also holds a unique commercial agreement with one of the world’s largest insurers, a group with a market capitalisation of approximately US$80 billion.
Taken together, these signals are enough for us to conclude that the business will gain market traction and that it already carries the backing of an established institutional player in its sector. That combination satisfies the criteria of several subsets of our investor base, which is precisely why we were confident in accepting the mandate.
Q&A: Key terms explained
Q: What is a mandate?
A: A formal engagement to act for a client. Here it is the instruction and authority to raise capital on the insurer’s behalf.
Q: What does underwriting mean in this context?
A: Our own assessment of a business before we take it to market, testing whether its characteristics would meet the investment criteria of our institutional investors. It is distinct from insurance underwriting.
Q: What is regulatory capital?
A: Capital that a regulated business, such as an insurer, is required to hold to meet the solvency and capital-adequacy standards set by its regulator.
Q: What is the capital stack?
A: The full range of financing layers used to fund a business, ordered by risk and priority of repayment, from senior debt at the top to equity at the bottom.
Q: What is senior debt?
A: Borrowing that ranks first for repayment and is typically secured, making it the lowest-risk and lowest-cost layer of the capital stack.
Q: What is a unitranche facility?
A: A single loan that blends senior and subordinated debt into one facility at one blended rate, simplifying the structure for the borrower.
Q: What is mezzanine debt?
A: Subordinated borrowing that ranks behind senior debt but ahead of equity, carrying a higher return to reflect the additional risk.
Q: What is special situations capital?
A: Flexible funding for businesses in transition or distress, such as turnarounds and restructurings, that fall outside conventional lending.
Q: What is equity?
A: Invested capital that shares directly in a business’s profit and loss and ranks last for repayment, in exchange for a stake in its ownership and future upside.
Q: What is an institutional investor?
A: An organisation that invests capital at scale, such as a private credit fund, bank, private equity firm, family office or venture debt fund, on its own behalf or for its investors.
Q: What is market capitalisation?
A: The total market value of a listed company’s shares, calculated as the share price multiplied by the number of shares in issue.
Enquiries
For further information, please contact info@langdoncap.com
About the author
Sabbir Rahman is Managing Director of Langdon Capital. He has held prior roles with Morgan Stanley, Lazard and Deutsche Bank. He has executed over £200 billion in notional value of debt, equity, M&A and derivatives transactions with global corporates, private equity funds and financial sponsor groups.
About Langdon Capital
Langdon Capital raises debt and equity for businesses with EBITDA between £2 million and £20 million from private credit funds, banks, private equity firms, special situations funds, family offices and venture debt funds. We raise capital to fund acquisitions, organic growth and turnaround situations. We hold direct relationships with key decision makers including CIOs, Heads of Direct Lending, Partners, MDs and Fund Principals at leading multi-billion £/$/€ AUM global institutional investors and provide our clients with swift, direct market access.
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