Sale of Forbes international risk services division will create largest independent broker
Only months after it denied a management buy-out, Alexander Forbes International Risk Services (AFIRS) has been bought by US broker Lockton.
The deal, worth £86m, will see the creation of the world's largest independent broker with revenues in excess of $600m.
Lockton, the eleventh largest US broker, will become the majority owner of Alexander Forbes International Risk Services (AFRIS). US-based investment fund Stone Point Capital will also take a minority shareholding in the company.
The sale comes three months after Mike Hammond, the former head of Marsh UK and more recently chief executive of JLT Risk Solutions, joined Alexander Forbes International Risk Services as deputy chairman.
Earlier this year there had been speculation that Hammond, would join forces with AFIRS chief executive, Stuart McCulloch, to look for venture capital funding for a management buy-out.
But in June the company denied this, saying it was looking for funding to propel growth.
At the time, Hammond told Insurance Times: "I wouldn't come to a broker that was about to be sold."
It has now emerged that the past month has been spent negotiating a deal with Lockton.
Hammond and McCulloch will not benefit financially from the deal but will be given equity to invest in the company once the transaction is completed. In the meantime the pair will be expected to put their own equity into the group.
AFIRS is now preparing for a recruitment drive as it aims to become the top player in each of its specialist lines.
"I am talking to at least 20 people in the market who want to join us," said McCulloch. "We see this move as propelling us into the talent market."
"We are now ready to invest in our product range and our industry targets," added Hammond. "We want to be number one, two or three in each of our speciality areas."
When finalised and given regulatory approval AFIRS will become Lockton International Holdings.
Alexander Forbes said it was still in talks regarding a potential takeover by private equity companies. It said the net consideration payable in relation to the deal would be £67.6m. The proceeds will be used to repay debts.
Combined brokers' revenues top $600m