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Insider in Full: Howden in talks with TigerRisk on potential takeover deal

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Topics: Mergers & Acquisitions Strategy

Howden is in talks with Flexpoint Ford-backed broker TigerRisk over a possible takeover, this publication understands...

The expansive broking group, which was valued at $5bn when it recruited its latest investor Hg in 2020, is understood to have been in discussions with specialist TigerRisk for at least the past fortnight.

TigerRisk’s growth has accelerated since its launch by Rod Fox and Jim Stanard in 2008.

In an interview in March, TigerRisk’s London CEO James Few told this publication that the company is expected to surpass $200mn in revenue in 2022.

The timing of a potential sale of TigerRisk – coming just two years on from Flexpoint Ford’s buy-in – is uncommon given private equity firms’ usual three- to five-year investment horizon.

However, TigerRisk’s rapid growth over the period could mean it has already met Flexpoint Ford’s return hurdles, making a straightforward sale of the asset possible.

Howden’s recent dealmaking track record also suggests a willingness to pay impressive multiples. The company last year won a hotly contested auction for Aston Lark, its largest ever acquisition, in which it paid 17x-18x Ebitda for the retailer.

Alternatively, Flexpoint Ford could roll over its investment by taking a stake in Howden itself, or employ a combination of these two options.

A roll-over would echo the arrangement made as part of Howden’s ~£700mn ($870mn) takeover of A-Plan, agreed in 2020, in which it bought the UK retailer from Hg and then secured an investment from the private equity house days later.

TigerRisk launched as a US business 14 years ago and added a London platform in 2011. It also has offices in Bermuda, Belgium and Hong Kong.

The company has positioned itself as an expert in particular niches, such as capital relief, adverse development covers and legacy deals, with an emphasis on smart use of technology and data.

A key attraction for Howden would be TigerRisk’s reinsurance book, which includes a notable presence in Florida.

Howden has already made a number of meaningful strides into the reinsurance market in recent years. These steps include bold recruitment drives such as the hiring of at least 25 former JLT Re executives from Guy Carpenter.

In an interview in September, CEO David Howden told this publication that the reinsurance segment now employs around 100 people across London, Australia, Hong Kong, Germany, France and Colombia, and places around $700mn of premium.

By 2020, it was estimated that TigerRisk’s reinsurance revenues had reached the region of $125mn, making it the world’s fourth-largest reinsurance broker behind Aon, Guy Carpenter, and Gallagher Re.

More generally, Howden’s growth in the past two years has ramped up, taking in both ambitious M&A in the UK and internationally as well as strategic lifts of key players from rival firms to anchor start-ups.

Recent big-ticket deals include the acquisitions of A-Plan and Aston Lark, as mentioned above, as well as its purchase of Align via its US MGA Dual and a string of European deals.

  

A spokesperson for TigerRisk said the company does not comment on market speculation. Howden declined to comment. Flexpoint Ford was contacted for comment.

 

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