AUB Group, the Australian equity-backed insurance broker network, has entered into an agreement to acquire a 70% equity stake in Pacific Indemnity, a specialty underwriting agency based in Australia.
According to the announcement, the investment is “highly complementary” as AUB continues to build a portfolio of agencies.
It has been confirmed that AUB will pay AUD 105 million upon completion of the deal, which is expected to be completed on July 1 2024. The balance is payable 18 months later on a sliding scale subject to Pacific Indemnity’s 2024-25 performance.
Moreover, the acquisition reportedly values Pacific Indemnity at an Enterprise Value of AUD 192 million, representing an EV/FY23 EBIT multiple of 13.0x.
In addition, AUB will also raise AUD 200 million via a fully underwritten institutional share placement to cover the upfront payment, with the remaining AUD 95 million supporting its mergers and acquisition pipeline and the cost of the equity raising.
An important factor to highlight, is that following the equity raising and completion of the acquisition of Pacific Indemnity, AUB expects its net leverage ratio to be under 1.75x with cash and undrawn debt of ~AUD 400 million.
Mike Emmett, AUB Group CEO and Managing Director, commented: “We are delighted to announce the acquisition of Pacific Indemnity, a high calibre business with an excellent management team which has delivered impressive growth to date.
“AUB has seen outstanding performance in our Agency portfolio. The acquisition of Pacific Indemnity will add scale, diversify our capabilities, and expand our expertise in financial lines. The acquisition also presents opportunities for mutual benefits across the business, through collaboration between Pacific Indemnity and the broader AUB Group.”
If you recall, AUB Group acquired wholesale broker Tysers in 2022. The company then raised AUD 150 million for potential M&A in 2023.
