Open GI is Towergate’s latest acquisition in £276m deal

Open GI chief executive Philip Bell has moved to allay brokers’ fears over its use of client data, following Towergate’s £276m takeover of the software giant.

Brokers using Open GI have expressed concerns that their confidential commercial information could be compromised in the wake of the blockbuster acquisition.

However in a statement Bell said: “There is clear water separation between both of our companies and therefore normal client data protection protocols apply.”

The £276m purchase of Open International – the largest in Towergate’s history – was described as pivotal by observers.

Alex Alway, chief executive at Jelf, said: “Brokers are seriously worried about client data. The market will be looking for assurances.” Stuart Reid, chief executive of AXA- owned Stuart Alexander questioned how brokers would be happy to operate a system owned by a major consolidator.

The £276m deal covers all Open International Group companies, including Open GI, the Countrywide Network, and London market technology provider, MI.

Towergate chief executive Andy Homer said it represented an opportunity to develop products and distribute them via the Open GI platform.

Open GI has 27,000 users of the system across 2,000 commercial and personal lines brokers, representing around 40% of the UK broker market.

He added that there was enormous potential in Open International’s Countrywide Network. Countrywide is one of the UK’s largest independent broker networks with over 700 members. Its schemes currently account for £300m in premium.

Homer said that the company would be looking to exploit opportunities to increase the business offering on the platform, and said Towergate’s underwriting agency, Fusion could play a more significant role. “We intend to develop the proposition available on the Open GI platform.”

Homer said that funds would be made available to invest in the development of the Open GI platform.

“If it transpires that some of Countrywide’s members want to talk to Fusion, we [will see what we can do].”

Homer said the deal would allow the company to drive growth in commercial lines EDI business. 99% of personal lines business is transacted via EDI.

Open International will be run as a separate entity under the Towergate Partnership umbrella and all of Open International’s 300 staff will remain. Bell and his management team who will maintain their owner driver status by retaining an equity holding in the business going forward.

Bank of Scotland, as Towergate’s lead bank, provided the debt funding for the transaction through a standalone vehicle. Towergate has a remaining acquisition fund exceeding £200m.

Open International was purchased from Misys in March 2006 for £182m by Montagu Private Equity and the management team.

The deal in numbers

100 offices
£1.8bn premium controlled
136 acquisitions

Open International
2,000 brokers
40% UK broker market
£35m revenue
£18.6m profits

700 members
£2.9bn transacted business
£300m in schemes