Sovereign trebles money on insurance sale

UK buy & build specialist Sovereign Capital Partners has made a 3.3x return through the sale of CMGL Group, a provider of outsourced claims and insurance management services, to The Capita Group for £32m.

The London-headquartered company has been part of Sovereign Capital’s portfolio since August 2005 when Sovereign Capital Limited Partnership II backed an MBO from Zurich Financial Services.

Philip Conboy, Director at Sovereign Capital, said: “We have enjoyed working with the CMGL’s management team to develop CMGL into the disciplined stand-alone business it is today. Capita provides a strong fit and we are delighted with the result.”

The sale of CMGL marks the first exit from Sovereign’s second fund, a £275m fund raised in 2005. It is the second exit by the firm since SENAD in July 2006 from Sovereign Capital Limited Partnership I, which generated returns of 6x money and an IRR of 110%.

CMGL provides services to FTSE quoted corporations, general insurers, Lloyd’s underwriters and London Market companies. It employs more than 440 staff based in London, Cheltenham, Birmingham and overseas, and provides professional claims and insurance management services to a wide range of insurance and corporate clients. The business recorded an annual turnover of £41.49m and operating profit of £1.23m for the year ended 31 December 2005.

Capita Chief Executive Paul Pindar said: “We intend to merge CMGL with our existing London Market operations, which will create significant economies of scale and will help to ensure that London remains at the heart of the world’s insurance industry.”