Sweet 17: Property and casualty insurer TWFG Inc. (TWFG) priced its IPO at $17.00 – $1.00 above the top of its range – and sold the full 11.0 million shares in the prospectus – to raise $187.0 million on Wednesday night, July 17, 2024. The IPO raised $22 million more than if it had been priced at the $15.00 mid-point of its $14.00-to-$16.00 price range. TWFG caters to individual and small business clients. The pricing at $17.00 gave TWFG a market cap – or a valuation – of about $923.67 million. (Editor’s Note: This column, published initially on Wednesday night, July 17, 2024, was updated at midday on Thursday, July 18, 2024, with news on TWFG’s debut on the NASDAQ.)
TWFG Inc.’s stock surged $5.00 – for a 29.41 percent gain from its $17.00 IPO price – to open at $22.00 in its NASDAQ debut at 12:08 p.m. EDT today – Thursday, July 18, 2024. Volume was about 1.06 million shares.
J.P. Morgan, Morgan Stanley, BMO Capital Markets and Piper Sandler were the joint lead book-runners. RBC Capital Markets, UBS Investment Bank, Keefe Bruyette & Woods (a Stifel company) and William Blair made up the rest of the joint book-running team.
TWFG Inc.’s IPO appealed to investors on two fronts – its profitability and its sector. Insurance companies’ IPOs, especially those in the P&C (property and casualty) insurance business, usually perform well.
“We are the seventh-largest personal lines agency in the U.S., based on revenue; we are the 26th largest agency across all lines of business,” TWFG says in the prospectus.
TWFG stands for The Woodlands Financial Group, the prospectus says. The company is based in The Woodlands, a Houston suburb.
Of the $187.0 million in the IPO’s estimated net proceeds, a total of $41.0 million will be used to repay debt under TWFG’s revolving credit agreement, the prospectus says.
TWFG will be controlled after the IPO by founder and CEO Richard F. “Gordy” Bunch III, who will hold 94.4 percent of the combined voting power of the outstanding stock, the prospectus says.
Bunch founded TWFG in 2001. He “created TWFG with a mantra of ‘Built by Agents, for Agents,’” the prospectus says.
“He identified the frictions inherent to captive distribution and set out to build a platform with tools and support functions that could better serve independent agents looking to run their own businesses. This foresight has positioned TWFG to benefit from a decades-long structural shift to independent agents that continues to gain momentum today,” the prospectus says.
The company says that its distribution platform “consists of more than 400 branches in 17 states and the District of Columbia as well as more than 2,000 MGA agencies in 41 states,” according to the prospectus. (MGA stands for Managing General Agent.)
TWFG is profitable. For the 12 months that ended March 31, 2024, TWFG reported net income of $26.52 million on revenue of $179.39 million.
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