U.S. buyout firm Hellman & Friedman LLC is exploring the sale of a stake in HUB International Ltd in a deal that could value one of the largest North American insurance brokerages at between US$6 billion and US$7 billion, including debt, people familiar with the matter said.
The move follows Hellman & Friedman’s acquisition of HUB four years ago from another private equity firm, Apax Partners LLP, for US$4.4 billion including debt. It indicates Hellman & Friedman’s likely interest in cashing out partly on that investment, while keeping HUB in its investment portfolio.
Hellman & Friedman has hired an investment bank to explore the stake sale, the sources said this week. The size of the potential deal could not be learned, though Hellman & Friedman would maintain control over HUB in any deal, the sources added.
Several private equity firms, sovereign wealth funds and public pension funds are considering an investment in HUB, one of the sources added.
The sources asked not to be identified because the deliberations are confidential. Hellman & Friedman declined to comment, while HUB did not respond to a request for comment.
Chicago-based HUB provides personal, business and employee benefit insurance products through more than 400 brokerages across Canada and the United States. The company generated total revenue of US$1.6 billion for the 12 months through September 2016, according to Moody’s Investors Service Inc.
The latest major private equity deal in the insurance brokerage sector was clinched in March, when U.S. buyout firm KKR & Co LP and Canadian pension fund manager Caisse de dépôt et placement du Québec teamed up to buy USI Insurance Services for US$4.3 billion from Canadian private equity firm Onex Corp.
Insurance brokerages have been consolidating to gain more scale and be able to charge higher prices, following years of falling rates in the insurance industry.
HUB itself has been highly acquisitive, snapping up hundreds of small and mid-sized brokers. It was founded in 1998 with the merger of 11 privately held insurance brokerages.
Update: The 1998 merger deal that created HUB involved a group of Canadian insurance brokerages.
Since it was acquired by Hellman & Friedman in 2013, the company has continued to expand its operational presence in Canada through numerous add-on acquisitions.
(Reporting by Greg Roumeliotis and David French in New York and John Tilak in Toronto; Editing by Tom Brown)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
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