Flood insurance provider Neptune targets $2.8 billion valuation in US IPO

By Arasu Kannagi Basil

(Reuters) -Neptune Insurance said on Monday it was targeting a valuation of up to $2.76 billion in its U.S. initial public offering, as the IPO market continues to run hot.

Some existing shareholders of the flood insurance provider are targeting to raise up to $368.4 million by offering 18.4 million shares priced between $18 and $20 apiece.

Neptune co-founder Jim Albert and private equity firms Bregal Sagemount and FTV Capital are among the selling stockholders.

The St. Petersburg, Florida-based company joins a growing list of insurance firms that have tapped public markets since May, with some calling it a "breakout year" for issuance from the industry.

"It's (Neptune) a profitable growth story in a large underpenetrated market, with cornerstone backing adding confidence, though the secondary-only structure leaves no new capital for expansion," said Kat Liu, vice president at IPOX.

Aspen Insurance, American Integrity, Ategrity Specialty, Slide Insurance and Accelerant have gone public in New York since May.

Wall Street had also turned to insurance firms to reopen the new listings market in May after tariff-driven chaos slammed shut IPO activity.

Launched in 2018, Neptune sells residential and commercial flood insurance policies on behalf of carrier partners throughout the U.S.

Flood insurance demand is expected to increase as climate change fuels more frequent and severe storms.

Neptune competes against the National Flood Insurance Program, a U.S. government-run entity and the largest provider of flood insurance in the country.

"With climate change pushing flood risk higher, demand for alternatives is likely to grow. If Neptune can demonstrate that its platform can capture share beyond NFIP and retain policies effectively, the growth opportunity could indeed bolster IPO prospects," Liu said.

Cornerstone investors T. Rowe Price Investment Management and AllianceBernstein have indicated interest in purchasing up to $75 million of shares.

Morgan Stanley, J.P. Morgan and BofA Securities are the lead underwriters. Neptune will list its stock on the NYSE under the symbol "NP."

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shreya Biswas)

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