Private equity firm eyeing stakes in overseas brokers

BP Marsh’s sale of broking group Hyperion has allowed the private equity firm to pay an enhanced dividend and repay £4.3m of directors loans.

The company is also eyeing a number of “compelling investment opportunities”, particularly in overseas brokers, following the Hyperion sale.

BP Marsh announced in its first-half results this morning that it would pay a dividend of 1.25p a share – a 25% increase from the dividend it paid in July 2012.  

The company added that it planned to maintain its current dividend policy.

The private equity firm, which focuses on funding start-up and early-stage financial services firms, and owns stakes in several brokers, sold 80% of its stake in Hyperion to General Atlantic Hawthorn Group for £29.2m. This left BP Marsh with £13.3m still invested in Hyperion.

BP Marsh chairman Brian Marsh said of Hyperion: “There could be no better example of the success of our business model than this. We work with the companies in which we invest to help them to grow and develop. Our initial investment in Hyperion was for £25,000 in 1994 and from those modest beginnings we have worked with Hyperion’s management to assist them in realising their ambitions for the company.

“Our long-term approach that favours working with management to achieve an exit may be unusual, but it works.”

Following the repayment of the director loans, BP Marsh had £16.5m of cash available at the end of the half-year ending 31 July 2013.

Investment opportunities

BP Marsh plans to reinvest the proceeds from the Hyperion sale in its existing portfolio of investments and new ventures.

Marsh said that the financial services sector is enjoying renewed optimism, as shown by the latest quarterly CBI/PwC financial services survey.

He said: “As conditions improve, we are beginning to see entrepreneurs more willing to take risks in starting and developing their businesses, and this has contributed to the number of compelling investment opportunities presented to the group during the six-month period.

“We are continuing discussions on several of these, specifically in the international insurance intermediary space.”

Financial results

BP Marsh made a profit after tax of £1.4m in the first half of 2013, down 35% on the £2.2m it made in the first half of 2011.

This was mainly driven by a fall in unrealised gains on investment revaluation to £1.4m from £2.2m.

However, the net asset value of its portfolio, which BP Marsh considers its main performance indicator, increased by 9.3% to £56.9m (H1 2012: £52m). This excludes the Hyperion transaction.

Marsh said: “It has been a fulfilling period for the group and our portfolio.”

BP Marsh also has a 36.71% stake in Lloyd’s broker Besso and a 1.35% holding in run-off buyer Randall & Quilter in its 10-strong portfolio.