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The Carlyle Group claims majority stake in Sedgwick for $6.7bn

13th September 2018 - Author: Matt Sheehan

Sedgwick, a global provider of technology-enabled risk, benefits, and integrated business solutions, has announced that affiliates of funds managed by The Carlyle Group have become its majority owner in a $6.7 billion transaction.

sedgwick-logoThe company’s current majority shareholder, KKR, will fully exit its position following the transaction, while funds managed by Stone Point Capital LLC and Caisse de dépôt et placement du Québec (CDPQ), together with Sedgwick management, will remain minority investors.

“At Sedgwick, taking care of people is at the heart of everything we do, and I am proud that The Carlyle Group appreciates the value our colleagues create when they put our caring counts philosophy into practice,” said Dave North, president and Chief Executive Officer (CEO) of Sedgwick.

“We are humbled by the confidence they have shown in our business model, and we look forward to partnering with Carlyle on developing and delivering innovative solutions for our clients around the world. We are grateful for the strong and value-added partnership with KKR over the last handful of years.”

Sedgwick handles, on average, more than 3.6 million claims every year and has fiduciary responsibility for claim payments totalling more than $19.5 billion.

The Carlyle Group said that equity capital for the investment would come from Carlyle Partners VII, an $18.5 billion fund that focuses on buyout transactions in the U.S., as well as from Carlyle Global Financial Services Partners III, L.P., a dedicated financial services buyout fund.

Stephen H. Wise, Managing Director and Global Head of Healthcare for The Carlyle Group, commented: “Dave North and Sedgwick’s world-class management team have built the company into an industry leader over the last two decades.

“We are excited to collaborate with Sedgwick, which has distinguished itself by constantly improving the claims management and loss adjusting process to the benefit of all key stakeholders, including its colleagues, customers, insurance companies and brokers.”

In August 2018, The Carlyle Group also entered into a strategic partnership with American International Group (AIG) to build AIG’s recently established Bermudian legacy reinsurance platform, DSA Re, into a standalone provider of reinsurance.

John C. Redett, Carlyle Managing Director and Co-head of Global Financial Services, stated: “We are pleased to partner with the exceptional management team and highly talented colleagues of Sedgwick.

“We look forward to participating in Sedgwick’s next chapter of growth and innovation and working with the company as it builds out its global platform to meet the increasingly complex needs of its clients around the world, while leveraging the One Carlyle network.”

Tagar Olson, Director of Sedgwick, Member of KKR, and head of KKR’s financial services investing efforts, added: “We have greatly valued our partnership with Sedgwick and its exceptional management team. We look forward to watching the company’s continued success in delivering high quality technology-driven insurance solutions to clients and consumers around the globe.”

BofA Merrill Lynch served as financial advisor to Sedgwick during the transaction, and Simpson Thacher & Bartlett LLP served as legal advisor, while Morgan Stanley and Sandler O’Neill + Partners, L.P. served as financial advisors to Carlyle, and Wachtell, Lipton, Rosen & Katz served as legal advisor.

The parties also stated that BofA Merrill Lynch, Morgan Stanley and KKR Capital Markets are expected to provide debt financing for the transaction.

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