Deal part of £65m new funding plan
Towergate is to sell a majority stake in Broker Network to Highbridge for £46m as part of plans to secure additional funding.
Highbridge is the majority owner of Towergate.
Towergate will retain 19.9% of Broker Network’s shares, but there will be no Towergate involvement in the day-to-day management of the business.
The deal is expected to close in the second quarter this year.
The sale includes the legal entities The Broker Network Limited and Countrywide Insurance Management Limited, as well as the assets of Broker Network Underwriting, which is a trading style of Towergate Underwriting.
The sale of Broker Network is part of a plan to secure additional funding from Highbridge of £65m. The plan also includes a five-year funding facility and an additional short-term loan facility of up to £28m.
Towergate said the funding would be used to accelerate investment in its transformation plan, including the recently-announced contract with Accenture to revamp its IT systems.
The news comes as Towergate reported negative earnings before interest, tax, depreciation and amortisation (EBITDA) of £34.6m for the full 2015 year. This compared to positive EBITDA of £32.9m in 2014.