Consolidator clarifies acquisition budget and outlines expansion plans in wide-ranging interview

Consolidator Chris Giles has revealed he has £300m to spend on acquisitions – not £500m as previously thought – but still plans to make a transformational deal to become a top 10 broker.

The clarification comes after Giles, chief executive of the broker Giles, declared in March that he planned to buy up rival consolidators with a £500m pot handed to him by private equity house Charterhouse.

In an interview with Insurance Times, he said £300m was “a more realistic figure”, taking into account acquisitions already completed. “It’s also £299m more than anyone else has to spend in this climate,” he added.

Giles said that at the time of the Charterhouse investment, he did not go into the precise breakdown of the equity and debt financing.

“We could have had £500m to spend on acquisitions [but] it was decided not to utilise the whole debt package that was available due to the financing fees,” he said.

He stressed that he had more than enough funding to support his current plans. “In addition, we have the in-principle support of our funders to extend their current support should a suitable opportunity arise,” he said.

The holding company of the Giles broking empire, Quillco 226, reported a £2m after-tax loss for the year to 31 August 2007 in its latest set of results. Consolidators point to earnings before interest, taxes, depreciation and amortisation (EBITDA) as a better measure of their performance, however.

Giles also outlined his expansion plans in the interview. He said he wanted to buy more brokers that had young, ambitious management teams. But he added that he was looking to make a “transformational” acquisition to take the business to the next level.

He also intends to prepare his business for an eventual flotation and is ready to lose the Giles name to achieve this ambition.

Giles also stressed that he led the approach for rival consolidator Oval in the summer, despite a statement from Oval boss Phillip Hodson that said the bid had come from Charterhouse. The statement said any merged business would have been rebranded under the Oval umbrella.

Giles said of the statement, however: “Phillip is a very clever negotiator.” He added that he hoped a deal could be completed in the future, but he was unsure of timing.