£45m MBO provides exit strategy for Giles family

Giles Insurance could float within three years as the broker gears up for a growth following a £45m management buy-out.

The broker also announced the acquisition of charity-specialist broker MCIS/BJK, which controls £16.5m in premium.

The MBO was backed by private equity specialist Gresham and Clydesdale Bank, and cuts the Giles family interest in the business to around a third.

The company said the deal provided access to additional funding that would be used for "selective acquisitions" around the country.

The acquisition of MCIS/BJK takes Giles Insurance premiums income to £90m. The company said its aim was to double the size of the business in the next two to three years, targeting premiums of £250m within three years.

It also intends to increase its areas of specialisation that already account for 50% of turnover. These include recruitment, leisure, construction, charities, professional indemnity and motor trade.

Giles chief executive Chris Giles told Insurance Times: "In the longer term we will be looking to do an IPO, but we need a capitalisation of over £100m and an EBITDA of between £15m and £20m."

He added: "We could float within the next three years."

Giles said the company's head office would eventually move to London from its current base in Glasgow. But he insisted the company was still "committed and keen to grow in Scotland".

The announcements came as Giles Insurance posted its full year results for 2005. Turnover increased to £15.4m from £12.6m, while operating profit climbed by 20% to £784,000. Pre-tax profits fell by 2% to £580,000, which Giles attributed to "non-recurring costs".

The company also announced the appointment of Howard Posner, former managing director of HBOS General Insurance as a non-executive director, and Jim Faulds, founder of the Faulds Group as non-executive chairman.