Takeover giant Charterhouse bids against itself

Private equity group pits two of its businesses against each other in £100m insurance auction
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The Independent Online

Two insurance brokers part-owned by the same private equity house have filed bids for some of the UK arm of the giant French insurer Groupama.

To the amazement of rival bidders and other onlookers in the field, both Acromas and Giles Insurance are looking at bids of up to £100m for Lark, Bollington and Carole Nash, insurance brokers being sold by the French mutual.

The oddity is that Giles is owned by Charterhouse, which is also one of three private equity firms alongside Permira and CVC that controls Acromas, the business formed from the merger of AA and Saga Insurance. One private equity source said: "They are bidding against themselves in effect. Forcing the price up. If I was an investor in a Charterhouse fund I would want to know why."

Groupama put its UK assets up for sale at the start of the year. It hired Mike Lamb of Deutsche Bank, one of the City's best-known deal makers, to oversee the sale.

Groupama hoped to sell the businesses – they also include Ryan Insurance and the private medical insurer Clinicare – in one go for an estimated £300m. That now looks unlikely, with several of the firms hoping to secure management buy-outs instead.

That may irk Groupama's UK boss, Francois-Xavier Boisseau, who said a while ago that "a cheap sale" of the assets was "out of the question".

Groupama, one of the world's largest mutual insurers, has assets of €90bn (£75bn). The UK businesses write premiums in property, casualty and motor insurance of €600m a year.

The group could certainly do with a financial boost. Last month, the chief executive, Thierry Martel, announced annual results that were hard hit by stock market falls and heavy exposure to Greek debt.

Acromas, led by chief executive Andrew Goodsell (pictured), has faced controversy in the past. In 2010, it made losses of £529m, entirely due to interest payments of £705m on debt of more than £6bn. That debt was piled on when the private equity firms acquired the business in 2007. Mr Goodsell is paid about £1.5m a year.

Giles was founded as a small family business in Scotland in 1967. It is now one of the largest independent insurance brokers in the UK, writing premiums of £600m a year. Charterhouse invested in the firm in 2008. The executive chairman is Chris Giles.

The deadline for final offers for the Groupama assets is said to be the end of this month. Others said to be working on an offer include Gresham Insurance.

RSA is thought to have considered a bid but stepped back. It has indicated to investors that it thinks there are better opportunities for deals overseas.

Deutsche Bank declined to comment.

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