Loss adjuster preparing to announce a major City-backed capital boost

Loss adjuster Davies Group is poised to unveil a major capital boost to the business that could see a significant restructure at the firm, Insurance Times understands.

Senior executives at the loss adjuster are believed to have secured capital backing from a City investment house.

Sources suggested that the loss adjuster was on the verge of completing a management buy-out (MBO) that would see the firm’s partnership structure dissolved or significantly altered.

“The current partnership structure is holding back the business. It is not the right structure to take the business forward and bring new people in. They have a backer in place. The timetable is to complete in six to eight week,” said one market source.

It is not clear how much money has been raised or from whom.

Other senior loss adjusting sources played down suggestions of a “transformational deal”, saying that Davies Group had raised money to buy out senior partner David Ede.

Davies Group did not deny suggestions that an MBO was imminent. Darren Coombes, a partner with the firm, told Insurance Times: “Davies Group has been in the process of considering a number of strategic options for the future since last year.

“We’re examining plans to grow Davies and offer a range of new services and will make an announcement as soon as we have decided on the most suitable route for the business to take.”

Last year, when rumours of a capital raising exercise first emerged, Davies Group denied that an MBO was under consideration.

At the time Malcolm Edwards, a partner at the firm said: “We have partners at the group, so a management buy-out wouldn’t be an option.”

The fact that the firm is no longer ruling out an MBO will be seized by some as implying that one is being looked at.

It is understood Davies Group’s turnover is £30m. It focuses on sectors including construction and engineering and offers a liability claims service, including public, employers and third party liability.

Last week the firm expanded its major loss and high net worth operation.

Recent years have a seen a number of MBOs in the loss adjusting sector.

Last year, senior management at specialist liability adjuster Garwyn completed a £20m MBO from insurer QBE.

In 2005, the directors of Ashworth Mairs Group secured a £62m management buy-out backed by Hermes Private Equity, with The Royal Bank of Scotland providing debt funding.