Private equity investment enables Giles to outline audacious target to grow the firm to £1bn GWP
Giles Insurance chief executive Chris Giles has set out his audacious plan to buy major consolidators Oval and Jelf after securing a £500m acquisition war chest from private equity investor Charterhouse.
The news comes as insurer AXA announced it had had an offer to buy the UK’s 15th largest broker, SBJ Group, accepted by the group’s board.
Giles said: “It’s about time some of the consolidators came together. My appeal is to come together before Towergate and Venture Preference [AXA’s broking arm] disappear over the horizon.”
He said he had his sights on Oval and Jelf. “The three of us could take on the big two.”
Broker Giles this week completed the sale of a 60% stake in the business to private equity firm Charterhouse Capital Partners. Reports have suggested that the deal price could value Giles at as much as £185m.
The deal will see Charterhouse and Bank of Scotland Corporate provide Giles with £500m of funding for acquisitions.
Giles said the aim was to achieve a business with £1bn in gross written premiums within three years through large and small acquisitions.
“But I won’t stop there. I want to get to a £2bn, £3bn and £4bn business,” said Giles.
He added: “Having this funding available will signal a major transformation of the company.
“We are looking to hire some of the very best people in the industry for Giles and expect to be in a position to announce some senior appointments in the very near future.”
Giles Insurance Brokers currently controls over £200m in annual premiums.
Gresham Private Equity, the previous private equity investors, has sold its 41% stake. Aviva has also sold its 7.5% stake.
Chris Giles will retain a 20% stake, with Giles’ management and staff controlling a further 20%.
Giles Insurance has also become an accredited Lloyd’s broker this week.
Meanwhile, the recent investment in Jelf Group by 3i QPE will give the broker access to a funding pot of £700m, it was revealed this week.
Jelf chief executive AlexAlway said: “3i have £400m, and up to £300m more if leveraged, to invest in small to mid-market companies. So far, they have only invested in two other companies.”
He said Jelf would be able to secure a significant proportion of that fund.
3i QPE took a 24.6% stake in Jelf last month, upping it to 27.9% last week.
Alway said that the heightened involvement of private equity in the sector would trigger a new wave of consolidation that would see the larger players buying one another.
“Of the wholly-owned brokers of some size, like Giles, Oval, SBJ and us, it is inevitable that at some point in the future there will be another round of consolidation.
“Whether it’s consolidating or being consolidated doesn’t matter. But you can sure there will be another round. It will cost between £100m and £300m if you’re going to buy another consolidator,” Alway said.
He would not be drawn on potential acquisition targets for Jelf.
The one billion pound week
AXA UK group chief Nicolas Moreau leads estimated 200m pound bid for SBJ.
Alex Alway given access to up to 700m pound war chest.
Private equity group buys 60% stake in Giles, handing over 500m pound for acquisition.