Tom Broughton comments on consolidator Oval.

What is driving consolidator Oval to consider a float? Its enigmatic boss Phillip Hodson likes to fly below the radar but, as his empire grows and the economy tightens, he is being forced to explain where Oval is headed and why. The news that the consolidator has suspended its long-running campaign to acquire Perkins Slade and seven other brokers may be seen as a blip in its expansion, but it too forces the company into the spotlight.

Whatever Hodson’s future strategy, it is clear that the business is performing well with profits following the same upward trajectory as its rapid turnover projections. Hodson’s plan may be to create something like a mini-Willis, focusing on being a joint broker and managed general agency. But he will have to weigh up the appetite from insurers which are becoming loath to negotiate hard with bullish consolidators. For the time being, Hodson will watch the market and assess the manoeuvrings of Towergate and Giles before making his next move. He has backing from investment house Caledonia and it is understood that further refinancing can be expected.

Oval is a traditional broker that likes to do business in a “proper” way. It moves along quietly and rapidly without the hype and bravado of some in this market and, as a result, it has a classic style all of its own. But now Oval is playing at the forefront of a rapidly changing market that modernises a little bit more with each groundbreaking deal or technological innovation. So if retaining its independence from insurers keen to take it over is a symbol of this traditional approach then a flotation may be the perfect vehicle – ­as soon as the time is right. In the meantime, Oval is beginning to realise that with speculation comes uncertainty. It will be keen to shore up its business, to reassure

its core staff and to focus on its core remit of growing the business again.

Aside from any flotation, refinancing or merger deal, however, the other key issue is whether Oval will plan to really examine and fully integrate its disparate group of brokers in a way that its rivals have decided to avoid or simply failed to do.