News

Bennetts MBO out of receivership – Difficult deal of real merit
Press release January 2003

Advantage Capital has backed the management buy-out and rescue refinancing of Bennetts, an independent insurance broking business. This is Advantage Capital’s maiden investment and is right in line with its investment strategy, being a “difficult deal of real merit.” Advantage Capital was set up exclusively to do deals that other private equity houses will not do.

One of the largest independent personal lines insurance broking businesses in the UK, Bennetts was founded in 1948. It operates from 30 branches in the southern Home Counties with a head office in Worcester. Annual gross premium income is approximately £40m. There are 230 employees.

The insurance broking industry is consolidating. This process is widely expected to speed up ahead of 2004 when the FSA assumes responsibility for regulating the sale of general insurance products. Well run and professionally managed brokers like Bennetts will be well placed to exploit this market opportunity. Consequently, growth by acquisition is a key plank of Bennetts’ future plans.

Advantage Capital led an equity syndicate which provided the main funding for the MBO. The management team, led by Ian Darbyshire (CEO) and John Langley (CFO) made a sizeable investment in exchange for a significant stake in the business. The vendor was Ernst & Young acting as receiver for the Royal Bank of Scotland. The deal was completed in record time, taking only five days between heads of agreement and completion. Neil Comer and Roger Wood of Bentley Jennison Corporate Finance introduced the opportunity to Advantage Capital.

Martin Bodenham and Trevor Jones of Advantage Capital commented: “We are delighted with Bennetts as our maiden deal. It symbolises perfectly what our investment strategy is all about – difficult deals of real merit. Bennetts is fundamentally a high quality, well run and established business. However, it was a difficult deal for equity financiers to do due to the sector, its poor recent trading history and the tight timescale involved in buying the business from the receiver.”

Ian Darbyshire added: “As a result of the backing from Advantage Capital, we have a much stronger balance sheet and the capacity to exploit the clear growth opportunities which lie ahead.”