Towergate to sell a majority interest in Broker Network
Towergate Insurance has agreed to sell a majority interest in Broker Network to Highbridge Principal Strategies for up to Â£46m.
Broker Network, which is based in Knaresborough, North Yorkshire, employs around 120 staff. Towergate, which also has offices in Hull, Leeds, Halifax and Sheffield, said it would use the proceeds from the transaction to accelerate its investment programme.
Towergate said the deal would also provide Broker Network with a strong platform for growth.
Towergate has been majority owned by Highbridge Principal Strategies since February 2015. The acquisition followed a turbulent time for the firm. In November 2014, it revealed it had fully drawn its revolving credit facility, raising fears among bond holders that it was no longer a going concern.
Thirteen months ago, Towergate accepted an offer from its creditors which led to an injection of £375m capital into the firm, and also reduced its net debt by 60 per cent.
In its full year results for 2015, Towergate revealed it had achieved an adjusted EBITDA of £79m, compared with around £93.2m the year before.
The EBITDA loss last year was £34.6m and total income was £352.7m, compared with £376.7m the year before.
David Ross, the chief executive, added: “This is a very solid performance. Income remained robust at £353m, which is testament to the deeply rooted knowledge and experience of our employees as trusted advisers in the communities we serve.
“Adjusted EBITDA of £79m is in line with expectations for a business that has experienced the legacy infrastructure and underinvestment challenges that we face.
“We’re very comfortable that we now have a good line of sight to what needs to be done, how much it’s going to cost, how long it’s going to take, and of the favourable impact it will have on improving efficiency in the business.
“We are investing over £14m to upgrade our IT infrastructure, part of a wider investment initiative in the business that will drive significant improvements in our back and front office.
“With crucial integration projects already underway, we expect to begin rolling out new systems to support the front end of our business by the beginning of Q3 (third quarter) 2016.”