SRG has agreed to acquire UK-based insurance intermediary CBC, a subsidiary of Paladin Holdings.
The deal builds on the specialist private equity investor BP Marsh and Partners’ decision to sell its majority 43.8% stake in Paladin to SRG.
BP Marsh initially acquired a 35% shareholding in Paladin in 2017 in a management buyout.
Since then, Paladin’s earnings before interest, taxes, depreciation and amortisation (EBITDA) have continued to increase from a loss of £50,000 ($62,935) in 2016, BP Marsh noted.
For fiscal year 2023 (FY23), BP Marsh has projected Paladin’s EBITDA to be £10m.
Subject to certain necessary regulatory approvals, the latest transaction has a net cost of £41.8m along with a repayment of its £5.9m loans to Paladin.
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BP Marsh will also receive its proportion of any net working capital adjustment, which the companies are planning to finalise within the next three months of the deal’s completion.
It will then receive deferred consideration of approximately £17.8m in cash.
This amount will depend on the 20% EBITDA growth, if Paladin outperforms its growth targets, compared with Paladin’s current EBITDA in FY24 and FY25. Thus, the amount will be payable in 2025 and 2026.
The latest transaction marks SRG’s 19th acquisition and the sixth in 2023. It is expected to enhance SRG’s existing portfolio in the UK, Ireland and globally.
SRG said that the transaction will not impact the current CBC team.
All 100 employees working at CBC will continue to work from the company’s headquarters in London, under the supervision of CBC chairman Andrew Wallas and CEO Robert Cottingham.
CBC, which specialises in Professional Lines insurance, will also be able to retain its brand.
Wallas said: “It was incredibly important that we chose a future home for CBC with care, to find a partner aligned with our values.
“When we first started speaking to SRG we were not considering selling CBC; however, we quickly realised the synergy between the two businesses.”
“CBC is a fantastic business, and its culture and specialisms perfectly align with us at SRG,” SRG Group CEO Warren Downey said.