Three in race to take over independent Lloyd’s broker
Jardine Lloyd Thompson (JLT) has emerged as the frontrunner in a £20m takeover bid for First City, the independent Lloyd’s broker.
Oval Group and Lloyd’s broker RFIB are also understood to be in the running for First City, which specialises in financial institution and professional risks business.
The acquisition is expected to be completed this week.
A £20m price tag, representing approximately the value of First City’s annual brokerage, would be cheap given current market conditions. Typical brokerage multiples have risen in recent months to over 1.75.
Market sources said Tim Watkins, First City’s chief executive and principal stakeholder, was selling his stake and leaving the company for personal reasons.
First City made a pre-tax loss of £735,000 in the year to 31 May 2006 on a brokerage of £21m. Holding company First City Insurance Group made a pre-tax loss of £1.8m on a brokerage of £21.7m.
It employs 200 staff, who own and control the majority of the equity interest in the company under an employee trust – putting them in line for a windfall in the event of a buy-out.
JLT has made a number of acquisitions this year. In April it acquired Pavilion Insurance Network for £6.6m in a move to expand its distribution capabilities. JLT also acquired Bermuda broker Park in July.
Meanwhile, Oval has made 20 acquisitions, with nine in nine months so far this year.
Chief executive Philip Hodson said in August: “There are another 12 [acquisitions] in the pipeline and we could see as many as 15 or 16 by the end of the year.”
RFIB is understood to have been looking to use new investment funds for growth following a capital restructuring in April.
JLT, First City, RFIB and Oval declined to comment.