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KKR, Canada’s CDPQ to buy insurance broker USI: Reuters

Private equity firm KKR (KKR.N) and Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) agreed to buy USI Insurance Services from Onex Corp (ONEX.TO) in a $4.3 billion deal, including debt.

The deal is the latest in a string of mergers in the insurance market, which has not grown quickly enough to support the smaller brokerages.

Valhalla, New York-based USI had net debt of about $1.82 billion as of Dec. 31 and generated earnings before interest, taxes, depreciation and amortization of $353 million in 2016.

“USI … is uniquely positioned to help address the risk management, insurance and employee benefits-related needs of small and medium-sized business owners,” said Tagar Olson, head of KKR’s financial services investing practice.
Canadian private equity firm Onex bought USI in December 2012 for $2.3 billion from Goldman Sachs Group Inc’s (GS.N) private equity arm, funding $702 million of that through equity and borrowing the rest with debt placed on the company.

The biggest deal last year in the insurance brokerage sector was the merger of Willis Group Holdings and Towers Watson, which created Willis Towers Watson Plc (WLTW.O), a company with a $17 billion market capitalization.
Last November, Greg Williams, the chief executive of Acrisure LLC, an insurance brokerage that was controlled by private equity firm Genstar Capital, completed a $2.9 billion management buyout of the company.

USI has been very active in buying small regional rivals. It has been seeking to beef up USI ONE Advantage, an interactive platform that helps the company share information with sales consultants sitting in offices around the United States.

The deal is expected to close by the end of the second quarter 2017.

New York-based KKR managed $129.6 billion as of the end of December, while CDPQ’s net assets under management totaled $270.7 billion.
Photo: Henry Kravis of Kohlberg Kravis Roberts & Co. speaks during an interview in New York, April 3, 2012. Reuters/Shannon Stapleton