US private equity firm swoops for Davies Group in £90m deal
Insurance claims services provider the Davies Group, which has an operation in Manchester, has been sold to HGGC, the US-based private equity firm, for £90m.
HGGC has opted to take a majority stake in the business as part of its next growth phase.
The deal also provides a successful exit for Epiris, which invested £42m as part of the original £61m acquisition of the group in 2011.
Stoke-on-Trent-based Davies, which also has operations in Birmingham, Harrogate, and Nottingham, is a third party administrator providing claims and insurance services to more than 100 clients across the UK & Ireland.
HGGC’s investment will allow the group to continue its strategy of investing in niche lines, technology and technical expertise.
Over the past four years Davies has delivered significant growth through a combination of new strategic partnerships and targeted acquisitions. Davies has completed seven bolt-on deals that have added technical expertise and a range of new services to its insurer, MGA, broker and corporate client base.
Alongside its established UK & Ireland claims strategy, Davies will additionally target new segments of the insurance services and specialty BPO markets, and overseas expansion for its claims business.
The existing management team, including chief executive Dan Saulter and CCO Darren Coombes, will continue in their roles, and will remain significantly invested in the business.
Saulter said: “We have a fantastic team here at Davies, and this investment from HGGC is a testament to their performance and delivery.
“We operate in a vibrant and ever-changing insurance market. We will continue to invest in service, technology and new capabilities to help our clients grow their businesses and provide great service to their customers.”
Rich Lawson, co-founder and chief executive of HGGC, said: “This is not your ordinary third party insurance administrator. Davies is at the forefront of innovative services within its industry and invests heavily in new technology—such as sophisticated workflow and analytics—that keep them ahead of the pack in the £1.5bn UK & Ireland claims outsourcing market.
“They are leading the way in new applications like telematics, drones, and mobile imaging for advanced claims management. We are very excited to partner with Davies to build on their success through organic growth and strategic acquisitions.”
Since its 2011 investment, Epiris has built the Davies Group up through management change, M&A and operational improvement. The business is now significantly larger and much better positioned than at entry.
Alex Fortescue, managing partner at Epiris, said: “We are delighted to have brought the investment in Davies to a successful conclusion. Dan and his team have done a tremendous job in transforming the business into a growing and successful TPA.”
Epiris acted on behalf of its client Electra Private Equity, which has received £45m from the proceeds of the sale, an uplift of £2m or 4% on the valuation of its investment in Davies at September 30, 2016, equivalent to an increase in NAV per share of 4p.
