Jefferies Added as Falcone IPO Underwriter After Deal
Fidelity & Guaranty Life, the insurer owned by Philip Falcone’s Harbinger Group Inc. (HRG), added Jefferies Group LLC as an underwriter for its initial public offering after the bank took a stake in Harbinger Group.
Jefferies, run by Richard Handler, and JPMorgan Chase & Co. (JPM) were among banks added to manage the share sale, according to a regulatory filing today from Baltimore-based Fidelity & Guaranty, which doesn’t say how many shares will be sold or give a price. The insurer’s previous filings listed only Credit Suisse Group AG (CSGN) as an underwriter.
The insurer is raising funds as Falcone focuses on his publicly traded Harbinger Group after a settlement with the U.S. Securities and Exchange Commission barred him from the hedge-fund industry. Some proceeds will be used to pay a dividend to Harbinger Group, according to the filing. A New York regulator prohibited Falcone from being an officer or director of Fidelity & Guaranty for seven years, citing the SEC settlement.
“Increasing demand for retirement and principal protection products combined with an evolving competitive landscape present us with significant opportunities to grow,” Fidelity & Guaranty said in today’s filing.
The firm focuses on sales of fixed-indexed annuities, which can offer savers some appreciation while limiting the risk of market losses. Pretax operating income in the 12 months ended Sept. 30 rose to $518.7 million from $159.8 million a year earlier, fueled by investment gains, today’s filing shows.
Jefferies reported holding 18.6 million shares of Harbinger Group as of Sept. 30, giving the investment bank a stake of about 13 percent. Leucadia National Corp. (LUK), which controls Jefferies and is also led by Handler, agreed in September to buy the Harbinger Group shares through subsidiaries for $8.50 apiece from Falcone’s hedge funds. Harbinger Group was unchanged at $11.45 in New York trading at 4:15 p.m.
Jefferies has worked with Falcone’s firms before Leucadia took the Harbinger Group stake. His hedge fund borrowed $190 million from Jefferies, people familiar with the transaction said last year. The investment bank worked with Harbinger Group in December when it sold shares in an offering, and with Fidelity & Guaranty when it issued debt in March.
Falcone’s SEC deal included an admission of wrongdoing for improperly borrowing money from his funds to pay his personal income taxes. Falcone, 51, is still listed as Fidelity & Guaranty’s “ultimate controlling person.” Richard Khaleel, a spokesman for Jefferies, declined to comment.
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