LDC Does Good On Davies Secondary Buyout

UK-based mid-market private equity house LDC has exited its investment in claims management provider Davies Group through a management-led secondary buyout backed by Electra Partners. The business was sold for 60 million pounds (US$80 million). The sale delivers a money multiple of 3.5x and an IRR of 45 per cent for LDC.

PRESS RELEASE

LDC, the leading mid-market private equity house, has exited its investment in claims management provider Davies Group through a management-led secondary buyout backed by Electra Partners. The business was sold for 60 million pounds (US$80 million).

Davies Group is one of the UK’s leading providers of claims management solutions to the general insurance industry, managing over 125,000 claims each year on behalf of a customer base which includes the majority of the UK’s leading insurers.

It provides a range of market-leading, added-value services, including claims management, loss adjusting and fulfillment, encompassing contractor management, disaster recovery and supply chain management.

LDC originally backed a management buyout of the business in February 2008, investing 8.6 million pounds (US$11.5 million).

During the last three years, LDC has supported the management team in a significant programme of operational development, driven by major investment in new systems, processes and technology to increase the speed and quality of its claims management services for clients and policyholders.

The strategy has helped the business to deliver strong organic growth, securing multiple new customer wins, while operating profits have increased from 3.5 million pounds (US$ 4.7 million) to 8.4 million pounds (US$11.2 Million). Over the period of LDC’s investment staff numbers have increased to over 600 with the creation of more than 200 jobs.

The sale delivers a money multiple of 3.5x and an IRR of 45 per cent for LDC.

Richard Stewart, investment director at LDC who led the original investment and the exit, said: “Davies Group has continued to outperform in its sector, which is testament to the quality of its management, the strength of its offering and its innovative approach to claims management. The business has an excellent platform for further growth and we wish the team every success on the next stage of their journey.”

Charles Crawford, Chief Executive Officer of Davies Group, said “LDC has been a very supportive investment partner over the last three years and has played a key role in helping to drive operational improvement and our financial performance. They have continued to provide the right mix of challenge and support and we greatly appreciate the positive impact they’ve had on the business.”

“In Electra Partners, we have secured the ideal investor to drive our continued growth, as we seek to expand our offering into new areas of the claims management market to support our expanding customer base and to assist us in delivering our acquisition strategy.”

ENDS

3 October 2011

Notes to editors

About LDC
• LDC (Lloyds TSB Development Capital) is part of the Lloyds Banking Group and is authorised and regulated by the Financial Services Authority.
• LDC has, since 1981, completed over 400 investments, has ongoing interests in over 60 businesses across the UK.
• LDC back ambitious management teams from UK-based companies seeking between 2 million pounds (US$2.7 million) and 100 million pounds (US$ 133.4 million) of equity for management buy-outs, institutional buy-outs or development capital transactions.
• LDC invests in a broad range of sectors and has particular experience in Construction & Property, Financial Services, Healthcare, Industrials, Retail & Consumer, TMT, Travel & Leisure and Support Services.
• LDC is the leading private equity company in the UK mid-market. Recent transactions include investments with Driver Hire, musicMagpie.co.uk, A-Gas, Kee Safety and eConveyancer plus exits from British Salt, Card Factory, Porterbrook, and VSG.
• LDC has a UK regional network of offices alongside an international operation based in Hong Kong.