Greenstone IPO, page-10

From AFR

Initial public offering hopeful Greenstone may have secured a high-profile chairman, but its owners and advisers have some work to do to overcome potential investors' fears around valuation.
While fund managers are aware that Greenstone wants to start listed life with a $1.5 billion valuation and up to a $1 billion equity raising, there are some concerns the company is operating on what is known as the "iSelect model".
It's understood Greenstone's team is trying to simplify the company's complex accounting principles in an effort to explain to investors how the insurer recognises revenue.
Fund managers said that under the iSelect-like method, Greenstone values the policies on its books using a discounted cash flow model each year. The company then reports the difference in year-to-year valuations as a profit or loss.
Some investors are concerned Greenstone is looking for an earnings multiple on a profit which is paper-based only and could be considered double-counting by seeking a multiple on the mark-to-market valuation.
Greenstone is expected to address the accounting treatment at its IPO roadshow, starting next week. It is also likely to face some questions about vendor and founder the Enthoven family and its intentions.
Richard Enthoven is expected to stay on Greenstone's board and retain a stake under a voluntary escrow.
At the smaller end of the insurance market, Sydney-based Assetinsure is believed to be the target of Kiwi IPO hopeful CBL Insurance.
As reported by The Australian Financial Review, CBL has agreed to buy an Australian company and is hopeful of regulatory approval by June 30.
It's understood CBL has told potential investors that Assetinsure, which has $40 million in net tangible assets, would give CBL an Australian platform from which it could expand in the region.
Assetinsure is a specialist insurance company for product lines focusing on companies and financial institutions. The business had a poor 2014 financial year, posting a $5.8 million loss, after it was hit by the largest ever claim in the Australian surety market from Forge Group. Assetinsure is privately owned.