Caledonia sells two investments from unquoted portfolio

Caledonia has sold its entire stake in Oval, a leading provider of insurance broking and financial services, to Gallagher, an international insurance brokerage and risk services firm quoted on the NYSE. Separately, Caledonia has also sold its stake in Amber Chemical Company, a global specialty silicones group, to ICM Corporation, a US based silicones business.

PRESS RELEASE

Sale of Oval for £210m to Gallagher
Transaction values Caledonia’s holding at £70m
Caledonia Investments plc (“Caledonia”) announces that it has sold its entire stake in Oval
Limited (“Oval” or the “Company”), a leading provider of insurance broking and financial
services in the UK, to Friary Intermediate Limited a wholly owned subsidiary of Arthur J.
Gallagher & Co (“Gallagher”) as part of the acquisition by Gallagher of the entire Oval group.
The transaction values Oval at £210m.
Oval was established in 2003 to bring together a number of the UK’s best regional
commercial insurance broking businesses. The business was led by Phillip Hodson as group
chief executive from 2003 before he took the role of non-executive chairman in March 2012.
Peter Blanc was appointed group chief executive at that point to lead the next phase of the
Company’s growth. Under their leadership and with the support of its shareholders, Oval has
been successful at acquiring and integrating over 30 leading local insurance brokers as well
as delivering organic growth from the enlarged group. Oval is now one of the UK’s foremost
national broking groups with revenues of over £98m.
Under the terms of the transaction, Caledonia has sold its 25.4% equity holding in Oval and
received repayment of outstanding loan notes and accrued interest, for a total consideration
of £70.0m. This comprised an immediate sterling cash payment of £67.6m with a further
£2.4m placed in escrow in respect of warranties and completion balance sheet adjustments
which, to the extent not utilised, will be released over the next 3 years. The consideration
represents an uplift of 64% over the last reported carrying value of Oval as stated in
Caledonia’s 2013 half-year results. The investment in Oval has returned a money multiple to
Caledonia over its period of ownership of 1.9x.
Caledonia initially committed £15.0m of funding to Oval through a combination of equity and
convertible loan notes and subsequently provided a further £29.7m as the business
developed. To date, it has received back £16.6m principally in loan interest. Its residual
investment in Oval was valued at £42.7m in Caledonia’s condensed company and group
statement of financial position at 30 September 2013 and £4.4m of investment income and
gains was included Caledonia’s company and group statement of comprehensive income for
the year ended 31 March 2013. The initial sale proceeds will be held on deposit for future
investment.
Commenting on the sale, Duncan Johnson, Caledonia’s Head of Unquoted Investments, said:
“We are delighted to report the sale of Oval to Gallagher after an 11 year relationship with
the business. Gallagher represents a very good home for Oval and I’m sure that the
business will continue to flourish under its ownership and Peter Blanc’s leadership.
2 of 3
Caledonia’s investment in Oval is a great example of our longer term unquoted investment
horizon providing support and capital to private companies beyond the typical three to five
year term that is traditionally the focus of the private equity industry.”
Peter Blanc, Chief Executive of Oval, commented
“Caledonia has been a great, longer term backer of Oval providing the support to allow us to
create the Oval of today. By joining forces with Gallagher we will become one of the most
powerful brokers in the UK market and I am very excited about the opportunities for our staff
and clients. With Caledonia’s backing we have purchased over 30 businesses, all of which
are now fully integrated, and we are ready to embark on the new opportunity with Arthur J
Gallagher”.

Sale of Amber
Caledonia Investments plc (“Caledonia”) announces that it has sold its stake in The Amber
Chemical Company Limited (“Amber”), a global speciality silicones group, to ICM Corporation Inc (“ICM”), a US based silicones business backed by Century Park Capital Partners.
Caledonia has realised £23m from the sale which represents a premium of more than 50%
on Caledonia’s book valuation of Amber at 30 September 2013 of £15.2m. The proceeds
realised from the sale are in addition to the £19.5m of capital and dividend receipts that
Caledonia has realised from Amber since 1 December 2010.
The sale of Amber is consistent with Caledonia’s unquoted investment strategy of building
long term value.
Commenting on the sale, Duncan Johnson, Caledonia’s Head of Unquoted Investments, said:
“Amber has been owned by Caledonia for over 50 years during which time the business has
developed into a market leading speciality silicones business and delivered good returns for
its shareholder. We firmly believe that Amber will fit well into ICM’s growing business and
are delighted that Caledonia’s long term, supportive investment approach has been able to
contribute to Amber’s development.”
Joachim Roeser, Amber’s Chief Executive Officer, who will step down following the sale, said:
“Over the last eight years, Amber has transformed itself into a global speciality silicones
business that is focused on delivering the highest level of service to its customers. I am
delighted that ICM has decided to purchase Amber and am confident that ICM will support
Amber in the next phase of its development.”
1 April 2014
Enquiries
Caledonia Investments plc Tulchan Communications
Will Wyatt, Chief Executive Peter Hewer
Duncan Johnson, Head of Unquoted
Investments
Tel: + 44 20 7802 8080 Tel: +44 20 7353 4200
END
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Notes for editors:
Caledonia Investments plc
Caledonia is a self-managed investment trust company listed on the London Stock Exchange
with net assets of approximately £1.3bn. The company maintains a concentrated portfolio of
international quoted, unquoted and fund investments and has paid an increasing annual
dividend for 46 years.
In the unquoted arena, Caledonia seeks to invest £20m to £60m in private companies either
on a majority or minority basis in situations where it believes there to be a good opportunity
for building value over the longer term.
The unquoted portfolio includes majority investments in: Park Holidays; Choice Care; TGE
Marine; Latshaw Industries and Sterling Industries; as well as minority investments in:
Cobepa and Bowers & Wilkins.
For additional information on Caledonia, please visit www.caledonia.com. Neither the
contents of the company’s website nor the contents of any website accessible from
hyperlinks on the company’s website (or any other website) is incorporated into, or forms
part of, this announcement.
Transaction details
Clearwater Corporate Finance provided financial advice to Caledonia with legal advice
provided by Macfarlanes (Ian Martin and Stephen Drewitt).

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