The transaction closed in late October, said Collin Roche, a GTCR managing director. The seller is MBNA Europe, a unit of Bank of America Corp. Premium Credit’s management is also investing, Roche said.
GTCR’s buy of Premium Credit is valued at $1.4 billion, a source said. The investment comes from GTCR’s tenth fund, which collected $3.25 billion in early 2011. The Chicago buyout firm has invested less than £200 million ($322.5 million) equity in the Premium Credit deal, the person said.
Premium Credit, of the United Kingdom, works with insurance brokers and carriers so that businesses and individuals can pay their insurance premiums in installments rather than a single annual payment. “It may be more effective for businesses to have a monthly expense and that’s what we accomplish,” Roche said.
BofA did not conduct an auction of Premium Credit, Roche said. GTCR has been in talks with BofA for roughly 24 months and discussions became “earnest” six months ago, he says.
The transaction is a typical GTCR deal. The private equity firm, which invests in financial services & technology, health care, as well as information services & tech, usually does corporate carve outs. Premium Credit, which was founded in 1988, wasn’t getting the focus and attention at BofA that it deserved, Roche said.
GTCR also likes to bring in management. Andrew Doman, the former Chairman and CEO of Russell Investments, is joining Premium Credit to serve as CEO. He is investing in the deal, Roche said. (Nick Pearce, Premium Credit’s retiring CEO, will stay on as a consultant and member of the board.) Simon Moran remains as Premium Credit’s chief marketing officer and head of Insurance Premium Finance, while Robert Allan remains as CFO.
Premium Credit will be a platform deal and will make follow-on acquisitions in the future, Roche said.
The deal presented several hurdles for GTCR. Premium Credit has funded receivables on BofA’s balance sheet, Roche said. The buyout firm created a separate entity to hold those funded receivables, he said. Five European banks—Barclays Capital, Lloyds Banking Group, Deutsche Bank, HSBC and Société Générale—then agreed to providing financing to support Premium Credit’s existing funding obligations.
“We worked through a tremendous amount of complexity to get the deal done,” Roche said.
Andrew Shuster, Kurt Kohlmeyer and Jason Whiting of Barclays, along with Howard Kessler of the Kessler Group, advised GTCR on the deal.