Just days after losing the music giant EMI, Guy Hands's investment vehicle Terra Firma is back in pursuit of a deal – in the rather less glamorous world of insurance.
Terra Firma is understood to be one of three potential bidders for Chaucer, the Lloyd's of London insurer, which was forced to reveal yesterday that it was in bid talks after its shares shot up in London trading. They finished ahead by 8.75p at 61.5p, although the company was careful to note in its statement to the Stock Exchange that "there is no certainty that these approaches will result in any offer being made for the company, or as to what terms any such offer may include".
There is thought to be at least one "trade buyer" among the three, as well as another potential private equity buyer, although talk that it is Carlyle Group is understood to be wide of the mark. Chaucer refused to go beyond its statement, while Terra Firma declined to comment.
The loss of EMI to Citigroup after protracted wrangling came as a blow to the buyout firm, whose ownership of the music business was an unhappy one at a time when the industry has been struggling to cope with a digital revolution and the unwillingness of many consumers to pay for its product given the proliferation of sites offering illegal free downloads.
Chaucer is a more known quantity in a sector which has been attracting considerable interest after years of being a relatively unloved and obscure sector. Many Lloyd's watchers have expressed concern about premium levels, saying there is too much capital chasing the business, forcing premium levels down as result.
However, the valuations placed on businesses like Chaucer by stock market investors have been seen as too low for some time, hence a revival of interest in the sector among buyout firms.
Brit Insurance Holdings, notable for its sponsorship of the England cricket team, is, for example, currently being taken private by two buyout firms, CVC Capital Partners and Apollo, and others may soon follow.