LONDON (Reuters) — Axis Capital Holdings Ltd’s increased takeover offer for Lloyd’s of London insurer Novae Group came after a shareholder revolt.

Bermudian-based insurer and reinsurer Axis announced it had increased its bid for Novae to £477.6 million ($611.38 million) to “bring certainty to the transaction”, as reported in this newspaper last Friday.

Novae Group agreed early last month to be taken over by Axis for £467.6 million in cash, representing a 700 pence per share offer with a hefty premium to the London-based insurer’s closing price from a day before the announcement.

But many shareholders said the offer undervalued the company, which covers property/casualty, marine, aviation and political risk. Late on Thursday, the two firms said they had agreed on a 715 pence per share offer.

“By offering Novae shareholders an improved cash offer, Axis aims to bring certainty to the transaction,” Axis said in a statement.

Novae’s board had unanimously recommended the sweetened offer — which will create a roughly $2 billion player in the London specialty market — to its shareholders, Axis said.

“We think the improved offer for Novae is a fairer reflection of the true value of the company,” said Mark Martin, head of UK equities and manager of Neptune UK Mid Cap Fund, the top shareholder when the offer was announced, with a 16 per cent stake. Neptune has drastically cut its stake since.

“We think there are relatively few other keen buyers in the market and would therefore be surprised to see a competitive bid situation arising.”

Neptune said in July that the original offer undervalued the company, and a fair offer would be at least 5 per cent or 6 per cent higher than Axis’s initial bid. Novae’s shares have risen 20 per cent since the offer in July. On Friday, they closed at 710 pence on the London Stock Exchange, up 1.8 per cent. “It’s still not an impressive price but MVN won’t stand in the way of the deal now,” said a source close to shareholder London-based MVN Asset Management, the second-largest shareholder in Novae with 9.62 per cent stake, according to Thomson Reuters data.

MVN voted against the previous deal in a proxy vote on Thursday, according to an e-mail seen by Reuters.

MVN, Kite Lake Capital and Sand Grove Capital Management all converted holdings in Novae through derivatives to shares that gave them voting rights on August 16, filings showed.

Gervais Williams, a fund manager at top-20 Novae shareholder Miton, said that income investors would also have been pleased by the increased offer in the light of the insurer’s decision earlier this month not to pay an interim dividend.

“Normally they would have paid a dividend at this time of year of 7.5 pence and because they’re being taken over they’re not paying that dividend,” Mr Williams said.

“It’s very nice to get the takeover, don’t get me wrong, and it’s nice to get the premium, but you’ve got to meet your shareholders’ expectations in terms of income.”

Insurers have been preparing for a wave of mergers and acquisitions, as valuations in the Lloyd’s insurance market became more attractive to overseas buyers due to a fall in the value of the pound after Britain voted to leave the European Union.

Lloyd’s companies such as Hiscox, Lancashire and Beazley have long been seen as acquisition targets, and insurers Amlin, Brit and Catlin have all been snapped up by in recent years.