B.P. Marsh has agreed to sell its shareholding in Paladin, the parent company of CBC Partnership, the London-based Insurance Broker, to Specialist Risk Group Limited (SRG), subject to regulatory approval.
Once completed, this will be SRG’s 19th acquisition, and will mark as the sixth one that the company has completed in 2023.
Terms of the deal state that CBC’s team of 100 dedicated individuals will continue to be led by CBC Chairman Andrew Wallas and CEO Robert Cottingham from its City of London headquarters.
At the same time, CBC will also retain their brand as part of the acquisition.
The organisation’s expertise across Professional Lines will complement SRG’s existing capabilities in this space, enhancing its extensive portfolio of specialist businesses in the UK, Ireland, and internationally.
Moreover, B.P. Marsh originally invested in Paladin as part of a Management Buy-Out in February 2017, with an initial equity investment of £3.5,000 for a 35% shareholding.
Importantly, the firm has also supported Paladin with loan funding during this time, and currently has outstanding debt of £5.9 million.
However, since B.P. Marsh’s investment, Paladin’s EBITDA has grown from a loss of £(50),000 in 2016 to a forecast adjusted EBITDA of £10 million in FY23. In the year ended 31 January 2023, Paladin contributed £0.9 million to the company’s total income from investments.
It has also been confirmed that upon completion, the company expects to receive at least £41.8 million in cash (net of all transaction costs) plus repayment in full of its £5.9 million loans to Paladin, an aggregate cash receipt of £47.7 million.
Further, Jon Newman, the organisations Finance Director and Nominee Director on the Boards of Paladin and CBC, will resign from his roles at Paladin and CBC on completion of the sale.
Jon Newman, the Group’s Finance Director, commented: “The sale of our stake in Paladin at an expected IRR of 45% at completion with the potential for significant further consideration over the next two years, is testament to our investment strategy and ability to identify opportunities to back successful management teams and to successfully realise value for our shareholders. We believe that there are few, if any, UK investors that could have made this investment, demonstrating the specialist position that B.P. Marsh occupies in the marketplace and the opportunities that this can provide our investors.
“It has been an absolute pleasure to work with Andrew Wallas, Rob Cottingham and the whole team at CBC and be a part of the transformational growth since the MBO almost seven years ago. This deal offers an exciting future for both SRG and CBC, and the whole of B.P. Marsh wishes everyone at CBC every success in the future.”
Andrew Wallas, Chairman of CBC, said: “When Rob Cottingham called me in 2016 to explain the opportunity for a Management Buyout of independent Lloyd’s Broker CBC, I contacted B.P. Marsh, who agreed to partner with us very readily. This year is the 50th anniversary of me commencing my career within the Lloyd’s market as a junior administrator with Nelson Hurst under the tutelage of Brian Marsh. B.P. Marsh has provided follow on funding and supported us to expand the business by attracting highly experienced, talented and dedicated practitioners.
“The B.P. Marsh nominee director on our board, Jon Newman, has provided us with insight, inspiration, wise council and a calming influence which has been invaluable to us as we have developed the business under the leadership of Rob Cottingham. The role and expertise of B.P. Marsh and in particular Jon Newman in helping us to navigate this transaction has been deeply appreciated by both Rob Cottingham and myself.”
Warren Downey, SRG Group CEO, added: “We are thrilled to welcome CBC to join us in the next chapter of the SRG story. CBC is a fantastic business, and its culture and specialisms perfectly align with us at SRG. We are excited to work with Chairman Andrew Wallas and CEO Rob Cottingham and we warmly welcome our new colleagues from CBC and look forward to working together on what will be an exciting future for our business.”
Lee Anderson, SRG Group Deputy CEO, said: “When we first started speaking to CBC, we quickly realised during our conversations that together we had the potential to create something very special. We have long admired CBC, largely due to their commitment to valuing their team. This is a quality we share with CBC, and something that we have spoken about together over the last year. CBC are innovators, growing their business through well considered organic growth, and embracing specialism.
“We feel confident that together we have the potential to do brilliant things and we are honoured that Andrew Wallas, Rob Cottingham and the rest of the CBC team have trusted SRG as the new home for their business.”
Wallas, added: “We are incredibly proud of the business we have built at CBC Partnership. We have valued accountability in all our interactions with each other, our clients and our partners and this has been proven to foster exponential growth. Under the leadership of Rob Cottingham, we have created a culture focused business which has proved financially successful and personally fulfilling.
“It was incredibly important that we chose a future home for CBC with care, to find a partner aligned with our values. When we first started speaking to SRG we weren’t considering selling CBC, however, we quickly realised the synergy between the two businesses.
“We admire the growth that SRG has achieved since its launch, whilst remaining committed to its people.
We are looking forward to this next stage for CBC, and with the support of SRG, our team will continue to access outstanding opportunities from which our clients and partners will also benefit.”
