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Novea Raises $55 Million to Advance InsureTech Platform
Last modified:Financial technology (FinTech) software company Novea, Inc. has closed $50 million in equity and $5 million debt financing. The equity proceeds will go towards Novea subsidiaries, Jacana Warranty and Jacana Insurance, to support a proprietary user application platform it developed which is revolutionizing the consumer warranty and service contracts industry. The debt proceeds will support general corporate overhead expenses.
The investment is provided by Swiss-based Newpoint Financial Group, a global diversified financial services firm with operations located throughout Europe, the United States and West Africa. The investment was made through Newpoint’s U.S. subsidiary, Newpoint Financial Corp.
In exchange for Newpoint’s $50 million equity investment, Novea has issued to Newpoint 10% of its outstanding common stock and convertible redeemable preferred shares.
The investment proceeds are being applied as statutory and solvency capital within Novea’s insurance division, Jacana Insurance—bolstering its balance sheet for its global insurance underwriting commitments.
As part of the transaction, Newpoint has also provided Novea a $5 million, five-year, revolving line of credit which Novea may draw down and use for corporate operational and overhead expenses. In addition, Newpoint was granted a warrant to purchase additional Novea common stock which may be exercised at Newpoint’s discretion in an amount up to $50 million over the next ten years, which if exercised in total, increases the transaction value to $105 million. Other investment conditions include Newpoint having board of directors and risk committee representation rights, and Newpoint’s reinsurance company, Newpoint RE having first right of refusal on all Novea reinsurance business opportunities as well as other customary covenants and monitoring rights.
“We couldn’t have asked for a better financial and reinsurance partner than Newpoint Financial,” said Jim Quinlan, CEO of Novea. “With this funding, we not only ensure moving Novea to the next level, but we are able to reward our existing long-term investors with a significant appreciation of their Novea shares as this transaction imputes a $500 million market value of Novea.”
Mr. Quinlan further commented, “Over the past couple of months, we have been closing multiple new customer contracts which represent significant sales growth for 2022 and we are looking to close out this year’s sales pipeline with contracts value in excess of $10 million in potential new sales.”
Keith D. Beekmeyer, CEO of Newpoint stated, “2021 has been a landmark year for Newpoint having closed $250 million in solvency capital investments into multiple insurance and reinsurance companies throughout Europe and the United States. We’re pleased to end the year on a high note with this $50 million investment into Novea. We believe that Novea’s technology and proprietary claims processing will redefine the consumer warranty marketplace and we are looking forward to a long term mutually prosperous partnership with them.”
Iroko Securities, a Newpoint subsidiary, served as financial advisor to Newpoint. NMS Consulting served as strategic advisor to Novea.
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