UK-based mid-market private equity provider LDC has exited its investment in outsourced insurance services provider Direct Group in a sale to Ryan Speciality Group. Terms of the sale were undisclosed.
LDC, the leading mid-market private equity provider, has exited its investment in outsourced insurance services provider Direct Group in a sale to Ryan Speciality Group (RSG).
The transaction remains subject to completion pending regulatory approval. Terms of the sale were undisclosed.
LDC backed a management buyout of Direct Group in 2007. Since then, with LDC’s backing, the business has made four strategic acquisitions to successfully diversify its outsourced services offering, including insurance broker Millennium in 2008 to develop its capability in distribution, followed by the Evander Validation Services business in 2010. In April this year it acquired laptop and mobile inspection specialist Circuit followed by Simple Insurance in June.
The strategy has driven sales growth of over 100 per cent since the MBO, with revenues currently around £20 million, while employees have increased from 70 to 450.
Ryan Specialty Group (RSG) said the deal would significantly strengthen its managing general agent (MGA) and third party administration (TPA) capabilities in the UK through.
The deal represents the 6th exit for LDC so far this year, with other realisations including the £148m sale of Eveden Group to Tokyo’s Wacoal Holdings Corporation and the £18m sale of Cranswick Pet Products to Westland Horticulture.
Nationally, LDC has invested £200million of equity in 13 businesses in 2012, including the £35 million buyout of outdoor advertising group Ocean and the £7.1 million de-listing of Boomerang, one of the UK’s most successful and fast-growing media production groups. It has also provided additional funding to support a total of nine portfolio acquisitions. Last year, it invested £380million in 20 new companies, as well as providing £53million of additional funding to existing portfolio businesses.
Based in Doncaster, Direct Group delivers a range of MGA and TPA services across the insurance industry and provides solutions to financial institutions, corporates and affinities. These include underwriting, proposition delivery, policy administration, premium collection, distribution services, insurer and captive reporting and comprehensive claims handling services.
The business has been a partner to specialist Lloyd’s insurer Jubilee, part of the Ryan Specialty Group, for a number of years. The acquisition will build on Jubilee’s existing TPA operation, Jubilee Service Solutions, and enable the company to access a wider range of complementary services to strengthen its offering to brokers and clients.
Following the acquisition Direct Group’s directors will remain with the business and play an active role in its future development.
Carl Wormald and Jon Pickering, who led the transaction for LDC, will both step down from the company’s board at completion.
Carl Wormald, Director of LDC, said: “Through a combination of highly targeted acquisitions and strong organic growth, the management team of Direct Group has built a business of significant scale and expertise in its market over the last five years with a clear and differentiated proposition. It is an excellent strategic fit for Ryan Speciality Group, which provides significant forward opportunities for its continued expansion and development.”
Derek Coles, CEO of Direct Group, said: “LDC has been a key backer and long-term supporter of our growth strategy over the last five years, which has enabled the management team to transform the business into a well-diversified, market leading player in outsourced services to the insurance sector.
“With additional debt funding from the Lloyds Bank Wholesale Banking & Markets team, we’ve been able to capitalise on acquisition opportunities quickly to develop and broaden our proposition, giving us a significant advantage in the market. We’re excited to be starting the next chapter of our growth as part of RSG.”
Johnny Rowell, CEO RSG Europe Ltd commented “ The acquisition of Direct Group significantly enhances Jubilee’s capabilities in the core consumer products area in the UK and provides growth opportunities for both Jubilee and Direct Group.”
DLA Piper (Nick Roome) and Clearwater Corporate Finance (Paul Jones) advised Direct Group’s shareholders on the transaction.
ENDS 19 September 2012
Direct line: 0161 235 0310
Mobile: 07976 291 532