Private equity firm acquires majority stake in claims manager

Mid-market growth investor Lyceum Capital has backed the management of UK Drainage Network (UKDN) after acquiring a majority stake.

UKDN, a drainage claims manager in the home insurance market, is headquartered in Solihull, West Midlands, and was formed by chief executive Greg Beech in 2003 through the merger of five regionally-based independent firms.

The company, which has a £20m turnover, provides claims management, remediation, validation, investigation and repair services for most of the UK’s largest household insurers from its nationwide network of 11 depots and 270-strong team of directly-employed skilled operatives.

Following the investment, UKDN and Lyceum Capital will broaden the group’s capabilities to encompass other services, creating an outsourced claims management and validation provider in the home insurance market. This will include a consolidation strategy to leverage UKDN’s existing infrastructure, with a number of strategic acquisitions already identified. The business will also continue to target growth opportunities in the drainage market.

The UKDN transaction was led by Simon Hitchcock and Martin Wygas of Lyceum. Hitchcock and David Harland, partners at Lyceum Capital, will each take seats on the company’s board.

Hitchcock said: “UKDN is ideally positioned to consolidate a highly fragmented sector. It has the infrastructure, nationwide coverage, technical skills base and proven management team to become a market-leading outsourced service provider in the market.”

He added: “With significant acquisition funding now in place, the company is a solid platform for Lyceum’s proven investment strategy for creating true scale and value in this sector.”

Greg Beech, chief executive of UKDN, said: “This is an exciting development for our insurance customers at a time when they are looking to increase efficiency by consolidating supply chains and partnering with technology-led, customer focused service companies.”

He added: “Lyceum’s financial backing and strategic input will enable us to accelerate our growth in this and other new markets, and represents a major vote of confidence in our team and business model.”

Newco was advised by Roger Buckley of BDO and debt funding was provided by HSBC.