Ardonagh looks overseas after £2bn refinance

Ardonagh, one of the UK’s largest private insurance brokers, is preparing to go overseas after completing a £2billion refinance.

The move comes as the insurance brokerage industry consolidates, with Aon and Willis Towers Watson combining to become a new number one and other big brokers such as Arthur J Gallagher expanding through acquisition.

David Ross, chief executive of Ardonagh, told the Financial Times that he plans to use the proceeds from the refinancing to catapult the company onto the world stage. “We have a huge acquisition pipeline. This company can become a global standard bearer. . . we will continue to make waves.

According to refinancing documents, the company has a pipeline of more than 35 acquisition opportunities.

Mr Ross said the London insurance market derives most of its business from the US, UK, Australia, New Zealand and North America. “Trading internationally from London provides a unique insight into highly evolved markets around the world, which can then inform investment decisions when we look outside the UK,” he added.

“We have huge firepower available and a very international management team on a UK-centric business,” he said. “We’ll be back after the summer with a full tank of gas.” The company said it had a £300m ‘war chest’ for mergers and acquisitions.

Five years ago Towergate, Ardonagh’s predecessor, was struggling and at the center of a battle between rival creditors after racking up huge debts in a wave of acquisitions. The company eventually emerged from a restructuring process and joined forces with several other brokers to become Ardonagh.

Since then he has made several acquisitions, including street broker Swinton and motorcycle insurance specialist Carole Nash.

Ardonagh, who has a net worth of £1.6billion, now has over 6,000 staff and generated revenues of £668million last year. Last week, the company completed a £2bn debt raise as well as two other acquisitions worth a total of £550m.

The refinancing was backed by US-based investment group Ares, Canada’s Caisse de Depot et Placement du Quebec and private equity group KKR. Ardonagh’s majority shareholders are private equity groups Highbridge Capital Management and Madison Dearborn Partners.

Mr. Ross says the company has no immediate need to seek a public listing. “We were able to pull off this refinancing without the distraction of having to explain ourselves to shareholders,” he said. “Ten years ago a company like ours would have prepared to go public to gain access to capital, but now there is a lot of private money available.”

Ardonagh is the second largest private insurance broker in the UK, just behind Hyperion, according to data from AM Best. After acquiring Willis Towers Watson, Aon will become the largest insurance broker in the world, just behind the American MMC. This agreement should be concluded next year.

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