Private equity house Electra’s stake in claims firm Davies jumped 65% in the six months to 31 March 2016, Electra’s accounts show.
The value of the 57% stake, which Electra bought when it backed Davies’s management buyout in 2011, is now worth £38m, up from the £23m it was valued at on 30 September 2015.
Key points
- Davies stake now worth more than Electra’s initial investment, but still worth less than total investment
- Electra believes Davies is now “in a strong position”
- There are further acquisition opportunities for Davies
The increase means that Electra’s Davies stake is now worth more than the £36m Electra originally paid for it.
But the stake value is still below the total £41m investment Electra has made in Davies. Since buying the initial stake, Electra has invested an additional £5m into Davies to help the firm fund acquisitions.
Davies contributed £3m to Davies’s purchase of liability loss adjuster Garwyn in December 2013 and a further £2m to help fund Davies’s acquisition of loss adjuster Argent in November 2015.
Electra acknowledged in its half-year results that the Davies investment “underperformed initially”. But following a turnaround and growth plan, which included broadening Davies’s offering beyond property and focusing on third-party administration, Electra said Davies is now “in a strong position”.
Electra said: “Systems investment, cost savings, M&A and contract wins have led to excellent operational and financial performance. The integration of the acquisitions has been completed on plan and has delivered both strong cost synergies and cross-selling opportunities.
“There are further acquisition opportunities which will be considered as they arise. Davies is growing and has the strategy and resources to accelerate.”
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