Ardonagh to Acquire Australia’s PSC Insurance Group for A$2.3 Billion

Ardonagh Group, the London-based independent insurance distribution platform, announced it has agreed to acquire Australia’s PSC Insurance Group Ltd., in a deal valued at A$2.3 billion (US$1.5 billion).

PSC is a diversified insurance services group that operates brokerage businesses and underwriting agencies, under more than 40 trading brands — primarily in Australia, the United Kingdom, Hong Kong, and New Zealand. It employs 900 people and manages more than A$2.59 billion (US$1.7 billion) in global gross written premium.

Under the terms of the deal, Ardonagh will acquire all of the issued ordinary shares in PSC for A$6.19 in cash per PSC share, which represents an implied equity value of A$2.256 billion ($1.5 billion) and enterprise value of A$2.429 billion ($1.6 billion).

Ardonagh intends to merge PSC’s Australia and New Zealand operations with Envest Pty Ltd., which was acquired by the group in February 2023, becoming one of Australia’s largest privately owned insurance distribution platforms, placing A$3.3 billion ($2.2 billion) in gross written premium annually.

Envest CEO Greg Mullins will oversee the combined operations for Australia and New Zealand.

PSC’s UK operations will be merged into Ardonagh Specialty and Ardonagh Advisory, further building the group’s position as one of the leading players in UK wholesale and retail broking, Ardonagh said.

Ardonagh intends to fund the transaction with approximately 50% equity from existing shareholders, Madison Dearborn Partners and HPS Investment Partners, and 50% debt including existing and new facilities. The transaction is expected to be near leverage neutral on a pro forma basis, the company said.

Certain PSC directors and managers are rolling approximately 26% of their aggregate shareholdings in PSC into shares in The Ardonagh Group.

The transaction is subject to customary regulatory approvals and PSC shareholder approval – all of which could be completed in late September.

PSC was founded in 2006 by Chairman Paul Dwyer who will join the Ardonagh senior management team upon completion of the deal and will work closely with the leadership teams in Australia and Ardonagh Specialty to integrate and grow the combined businesses.

Ardonagh made its first acquisition in Australia in February 2021 with the purchase of Resilium Insurance Broking. It acquired Brisbane-headquartered Envest in February 2023 and merged both businesses into the Envest platform.

Since then, Ardonagh has backed Envest to complete over 30 acquisitions, building gross written premium to more than A$2.1 billion across Australia.

Ardonagh’s key platforms include MDS Group, a leading broker and risk management adviser across Portugal and Latin America; Arachas, one of the largest insurance brokers in Ireland, and Price Forbes, a major London-based insurance broker.

The Ardonagh Group places over US$15 billion of premium globally on behalf of its clients and operates in 30 countries.

“The acquisition, which has secured the unanimous recommendation of PSC’s board, is a significant milestone in the global growth of Ardonagh and underlines our strong commitment to the markets we serve,” commented David Ross, CEO of The Ardonagh Group, in a statement.

“Today marks an important day in PSC’s history. This transaction recognises the quality and strength of PSC’s people and business that has developed over the last 18 years,” according to PSC Chairman Dwyer. “We believe this transaction maximises value for PSC shareholders while also providing an excellent platform for growth for PSC employees and clients.”

“Together with Tony Robinson and the wider PSC leadership, we believe the scale and footprint we collectively bring to this next chapter is set to create huge opportunities to grow and innovate in the APAC region,” said Greg Mullins, CEO of Envest.

PSC’s teams and capabilities “are highly complementary with what we have built in Price Forbes, and their commitment to providing a boutique service to clients is perfectly aligned with our own,” said Andrew Wallin, Ardonagh Specialty CEO.

Macquarie Capital and Stanton Road Partners are acting as financial advisers to The Ardonagh Group on this transaction alongside legal advisers Herbert Smith Freehills and Ashurst.

PSC has operations in Australia, the United Kingdom, Ireland, Hong Kong, Vietnam, New Zealand and Bermuda. The company operates four business segments: Distribution, Agency, United Kingdom (International) and Group.

PSC’s Distribution segment includes PSC Insurance Brokers, PSC Network Insurance Partners, PSC Life, and PSC Workers Compensation Services. Its Agency segment offers underwriting agencies, including Chase Underwriting, Breeze Underwriting, Chase Travel, and Medisure Indemnity Australia. Its United Kingdom (International) segment includes Paragon International Insurance Brokers, Paragon Bermuda, Carrolls, Breeze Underwriting (UK), Chase Underwriting (UK), PSC UK Insurance Brokers, PSC Europe, and the Hong Kong businesses. The company’s Group segment includes various investments from non-operating assets.

The Ardonagh Group reported pro forma income for 2023 of $1.9 billion and pro forma adjusted EBITDA of $695 million, including completed and committed acquisitions to March 20, 2024. Ardonagh’s shareholders are Madison Dearborn Partners, LLC (MDP) and HPS Investment Partners (HPS).

Source: The Ardonagh Group

Topics Mergers & Acquisitions Australia