March 21, 2023

British Columbia Investment Management Corp. and Preservation Capital Partners are considering a sale of BMS Group that could value the insurance broker at more than £600 million ($720 million), people familiar with the matter said.

The investment firms are working with Evercore Inc. to evaluate strategic options for the business, the people said, asking not to be identified because the matter is private.

BMS generates about £100 million [$120 million] in annual earnings, according to the people. Financing for a deal is attracting the interest of both banks and private debt providers, they said.

Deliberations are ongoing and there’s no certainty they will result in a sale, the people said. A representative for Preservation Capital declined to comment, while spokespeople for BCI, BMS and Evercore couldn’t be reached for comment.

London-based BMS helps corporations looking to buy a range of specialty insurance and reinsurance products, according to its website. BCI and Preservation Capital invested in BMS in 2019 at a valuation of £500 million [$600 million].

Insurance brokers are attractive targets for private equity firms as they aren’t required to maintain large regulatory capital buffers. The fragmented nature of the industry also allows for expansion through acquisitions. The businesses are often sold between buyout firms, with valuations sometimes based on aggressive assumptions about future revenue.

Earlier in November, KKR & Co. agreed to acquire French insurance broker April from CVC Capital Partners in a €2.3 billion ($2.4 billion) deal.

Preservation Capital is led by founding and managing partner Jatender Aujla, a former Warburg Pincus dealmaker. The firm typically makes equity investments of £50 million to £150 million. BCI is one of Canada’s largest institutional investors.

–With assistance from Dinesh Nair.

Photograph: The Shard skyscraper on the skyline beyond residential property in London, UK, on Tuesday, Feb. 1, 2022. Photo credit: Chris J. Ratcliffe/Bloomberg

Copyright 2022 Bloomberg.


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