Hercules Property Services has bought two London insurance brokers for just under £10m, to consolidate its position as the UK's largest specialist property insurance intermediary.

The entire share capital of Cadogan Insurance has been acquired for £4.8m, and the goodwill and certain other assets of Kounnis Brokers for £5m.

In addition, Hercules is buying Baker Lorenz, a property consultancy, for £5.8m, bringing its total acquisitions to £15.6m.

“Each of these businesses provides Hercules with an excellent opportunity to expand in specific market niches within the property services industry,” said Hercules chairman Larry Lipman.

“Our experience is that established brands such as Cadogan, Kounnis and Baker Lorenz will respond well to the strength of Hercules, benefiting particularly from the cross-selling opportunities within the enlarged group.”

Cadogan is a commercial property insurance broker operating in the West End of London. Its gross brokerage income was about £1.5m for the year ending April 30, 2000, and net profit before tax was about £550,000.

Kounnis Brokers is a property insurance intermediary that was originally formed to service the Kounnis Group's own property interests. After 1994, however, it began offering rates to other parties.

In the 12 months to March 31, 2001, the company received gross written premiums of more than £2m .

Baker Lorenz employs 23 surveyors and specialises in commercial property from its offices in Hanover Square in London.

The three acquisitions will be funded by a share placing and open offer that is planned to raise £16.3m. The deal is underwritten by Investec.

All qualifying Hercules shareholders can subscribe for open-offer shares at 555p apiece. This will be on the basis of one open-offer share for every ten ordinary shares held.

A £15m loan facility has been set up with Barclays Bank as fallback funding, should shareholders reject the placing and the open offer.

Hercules, which also bought Housing Association property insurance intermediary Farr last year, has grown rapidly. Its profits have risen from £300,000 in 1997 to just under £10m in 2000. Most of its revenue comes from arranging property insurance and managing property portfolios.