Disposal

RNS Number : 7665D

Caledonia Investments PLC

01 April 2014

 



 

 

Caledonia Investments plc

Sale of Oval for £210m to Gallagher

Transaction values Caledonia's holding at £70m

Caledonia Investments plc ("Caledonia") announces that it has sold its entire stake in Oval Limited ("Oval" or the "Company"), a leading provider of insurance broking and financial services in the UK, to Friary Intermediate Limited a wholly owned subsidiary of Arthur J. Gallagher & Co ("Gallagher") as part of the acquisition by Gallagher of the entire Oval group. The transaction values Oval at £210m.

Oval was established in 2003 to bring together a number of the UK's best regional commercial insurance broking businesses.  The business was led by Phillip Hodson as group chief executive from 2003 before he took the role of non-executive chairman in March 2012. Peter Blanc was appointed group chief executive at that point to lead the next phase of the Company's growth. Under their leadership and with the support of its shareholders, Oval has been successful at acquiring and integrating over 30 leading local insurance brokers as well as delivering organic growth from the enlarged group. Oval is now one of the UK's foremost national broking groups with revenues of over £98m. 

Under the terms of the transaction, Caledonia has sold its 25.4% equity holding in Oval and received repayment of outstanding loan notes and accrued interest, for a total consideration of £70.0m.  This comprised an immediate sterling cash payment of £67.6m with a further £2.4m placed in escrow in respect of warranties and completion balance sheet adjustments which, to the extent not utilised, will be released over the next 3 years.  The consideration represents an uplift of 64% over the last reported carrying value of Oval as stated in Caledonia's 2013 half-year results.  The investment in Oval has returned a money multiple to Caledonia over its period of ownership of 1.9x.

Caledonia initially committed £15.0m of funding to Oval through a combination of equity and convertible loan notes and subsequently provided a further £29.7m as the business developed. To date, it has received back £16.6m principally in loan interest. Its residual investment in Oval was valued at £42.7m in Caledonia's condensed company and group statement of financial position at 30 September 2013 and £4.4m of investment income and gains was included Caledonia's company and group statement of comprehensive income for the year ended 31 March 2013. The initial sale proceeds will be held on deposit for future investment.

Commenting on the sale, Duncan Johnson, Caledonia's Head of Unquoted Investments, said:

"We are delighted to report the sale of Oval to Gallagher after an 11 year relationship with the business.  Gallagher represents a very good home for Oval and I'm sure that the business will continue to flourish under its ownership and Peter Blanc's leadership.

Caledonia's investment in Oval is a great example of our longer term unquoted investment horizon providing support and capital to private companies beyond the typical three to five year term that is traditionally the focus of the private equity industry."

Peter Blanc, Chief Executive of Oval, commented

"Caledonia has been a great, longer term backer of Oval providing the support to allow us to create the Oval of today.  By joining forces with Gallagher we will become one of the most powerful brokers in the UK market and I am very excited about the opportunities for our staff and clients.  With Caledonia's backing we have purchased over 30 businesses, all of which are now fully integrated, and we are ready to embark on the new opportunity with Arthur J Gallagher".

1 April 2014

Enquiries

Caledonia Investments plc	Tulchan Communications
Will Wyatt, Chief Executive	Peter Hewer
Duncan Johnson, Head of Unquoted Investments
Tel: + 44 20 7802 8080	Tel: [phone]

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Notes for editors:

Caledonia Investments plc

Caledonia is a self-managed investment trust company listed on the London Stock Exchange with net assets of approximately £1.3bn. The company maintains a concentrated portfolio of international quoted, unquoted and fund investments and has paid an increasing annual dividend for 46 years.

In the unquoted arena, Caledonia seeks to invest £20m to £60m in private companies either on a majority or minority basis in situations where it believes there to be a good opportunity for building value over the longer term.

The unquoted portfolio includes majority investments in: Park Holidays; Choice Care; TGE Marine; Latshaw Industries and Sterling Industries; as well as minority investments in: Cobepa and Bowers & Wilkins.

For additional information on Caledonia, please visit www.caledonia.com.  Neither the contents of the company's website nor the contents of any website accessible from hyperlinks on the company's website (or any other website) is incorporated into, or forms part of, this announcement.

Oval Limited

Established in 2003, Oval Limited is an award-winning national group with a strong regional footprint and a global reach that offers a superior - and always local - service. Innovation, responsiveness and flexibility sit at the heart of what Oval does.

Oval's strength lies in designing bespoke, dynamic and keenly competitive financial solutions that fit clients' needs exactly while simultaneously simplifying complexity.

Oval employs over 1,150 staff in over 20 offices throughout the UK. 

Oval reported adjusted EBITDA of £15.3m for the year to 31 May 2013.

Transaction details

Evercore Europe (Mark Hennessy) provided financial advice to Oval with legal advice provided by Macfarlanes (Stephen Drewitt).  Gallagher was advised by BDC Corporate Finance (Chris Keey) and Lawrence Graham.

 

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