SME broker boosted by investments from Norwich Union and Stena, as it lists on AIM market.
Group Direct, the SME broker which listed on the Stock Exchange following investment from Norwich Union this week, has pledged to be the “anti-consolidator” of the insurance market.
In an exclusive interview with Insurance Times, the £85m GWP broker outlined plans to capitalise on growing discontent with consolidators – large brokers that grow by acquisition – by growing organically.
Chief executive Arron Banks said: “Consolidators are going to unwind rapidly. There is a fight back from insurers squeezing the margins.”
Group Direct announced on Tuesday that it has benefited from a £5.7m investment from Aviva-owned Norwich Union, equivalent to a 9.2% stake in the business. Swedish business giant, Stena Investments has also purchased
a £4.9m stake as part of a reverse takeover of the business by the Brightside Group, that will see it become a public listed company. Brightside Group has also acquired Injury QED.
Banks said the broker would not look to make leveraged investments. Rather, it would continue to grow organically and by making a small number of large acquisitions.
“Our investors have seen that it is a good opportunity and put money in,” he said. “The reason for listing is if a strategic opportunity comes our way we have got the know-how to go forward and pounce.”
He added: “The whole business is based on organic growth which I think is why Norwich Union and Stena have invested.”
“Consolidators are going to unwind rapidly. There is a fight back from insurers squeezing the margins.
Norwich Union’s investment in the broker comes just weeks after chief executive Igal Mayer said he would rather lose business than pay sky high commissions to consolidators.
The insurer currently has around a 5% stake in Jelf, and sold a 7.5% stake in Giles in February.
Since it was formed in 2001, Group Direct has increased its revenue to £23.3m.
Paul Chase-Gardner, chairman of Group Direct, has been appointed the new group chief executive of Brightside Group.
The company has also made the former chairman and chief executive of Shell UK, Chris Fay, a new non-executive chairman.
In a separate initiative, the Brightside Group is hoping to launch a New Start Capital scheme.
The group will take stakes in brokers and then raise funds to help them develop.
Arron Banks in brief
Co-founder of the Brightside Group in February 2005.
Co-founder of Commercial Vehicle Direct Insurance Company (the original business which later formed Group Direct) in early 2001 and chief executive of Group Direct.
Chief Executive of Conister Trust Financial Group, an AIM-listed financial services institution, based in the Isle of Man.