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Insider in Full: Tysers revived sale process: Four takeaways for London broking M&A

News that PE house Odyssey has revived its erstwhile quest for a new owner for Tysers, its London market asset, has much to tell us about the positions of the various players in the tale...

The revived process comes after the last round of talks, at that point conducted only with Miller, broke down in November 2021, leaving the future ownership of Tysers in question.

Odyssey’s divestment attempts have been hampered by a variety of elements, not least the outbreak of Covid-19 in 2020. But Tysers’ work to unify its various operations and the arrival of a new kid on the London broker M&A block have changed the state of play.

Below we summarise the five key points the renewed process highlights.

1. A more positive story for Tysers

One of the key issues that ran previous sales attempts aground was difficulty valuing the contribution of Tysers’ significant sports and entertainment segment, which in 2020 suffered a severe downturn due to the pandemic.

With the lifting of most Covid-19 restrictions worldwide during 2021 and this year, however, live events and insurers and brokers trading in contingency cover have bounced back – creating a more comforting set of numbers for Tysers to present to potential suitors.

A second key development for the business is increased efforts on the integration front.

Odyssey first brought Tysers to market in May 2021. This was just over a year and a half after Tysers agreed to buy London market rival RFIB, and less than 12 months since the business had announced the appointment of its current CEO, Clive Buesnel.

Buesnel, a well-known market figure with a reputation for strategic change programmes, had therefore had just a matter of months to work on the unification of the new Tysers – rather than the years that presumably would have been preferable.

Just under 12 months on, it is now understood that Tysers has made meaningful progress with the integration and strategic positioning of the business that will make it more appetising to potential buyers.

The sale of the broker’s trade credit and surety business to Nexus’ specialist outfit Xenia in January this year could be read as part of this work.

Meanwhile, Tysers will have also been buoyed by the tailwinds which have boosted performance at the London market brokers (see ‘Private investment, post-pandemic trends drive good times for London brokers’). This trend has been demonstrated to a lesser extent in the growth figures of the global listed players. 

 However, there are also some market-wide headwinds that are running down the clock on Tysers’ time to execute.

All brokers are caught up in an extended battle for talent driven by market-wide growth initiatives and a finite pool of suitable human resource.

Tysers has participated in the hiring frenzy as its peers have, and it would be unfair to suggest all traffic has been exiting rather than entering the broker.

However, as demonstrated by WTW’s essentially forced sale of Willis Re after the collapse of its Aon merger, a business whose ownership is in question for a protracted length of time runs an increased risk of talent flight. The sooner it can provide security for staff, the better.

2. Miller is on a quest for growth

The revival of talks between Cinven and Odyssey/Tysers indicates continued pressure from Cinven on Miller to deliver growth.

The PE firm, along with sovereign wealth fund GIC, agreed to buy Miller in November 2020 (in a process in which, funnily enough, Tysers was the underbidder).

Shortly after the deal, Miller CEO Greg Collins told this publication that the business would enter “a new phase of growth” in which it would make “precise strategic investments” in order to expand.

While it has been active in hiring teams and individuals, more than a year later Miller has made no significant strategic acquisitions.

As a privately owned company, Miller’s financials are not subject to in-depth reporting. However, assuming it has kept pace with peers, growth over the past two years would be around 20% – but this may not be enough to satisfy the notoriously steep demands of PE backers. A strategic acquisition could solve that issue in relatively short order.

3. Austbrokers’ interest will be welcome

The appearance of Austbrokers on the London broking M&A scene will look to Tysers like a breath of fresh air.

It is one of the largest networks of insurance intermediaries in Australasia and is backed by AUB Group, an ASX top-200 listed company, which looks keen to follow fellow Australian firm and Paragon owner PSC in setting up a UK platform.

The introduction of a new player in London broking M&A, at a point when the field of potential buyers has been narrowed following a lengthy period of consolidation, has brought with it an injection of competitive tension to a sale process that at times has gone slack.

4. Ardonagh – opportunistic rather than mission-critical

As noted in our initial news story yesterday, Ardonagh is among the players showing an interest in Tysers, but is understood to have conducted less work on the potential deal than others.

Buying Tysers is not a strategic imperative for the M&A behemoth, recently valued at $7.5bn.

The group already has a significant London market presence through the various entities within Ardonagh Specialty, which encompasses Price Forbes and Bishopsgate, as well as the assets it acquired through the $500mn purchase of Corant Global last year.

With its enviable supply of capital and platform optionality, Ardonagh’s purchase of Tysers would be opportunistic rather than mission-critical. And as an already fairly complex corporate structure, the deal would present more of an integration challenge than it would to the other two bidders.

The outcome of this round of negotiations for Tysers is as yet anyone’s guess. But the revival of sales talks – this time with a better-positioned target on the table and a set of buyers with renewed interest – is a real opportunity for the 200-year-old broker.

 

Insurance Insider delivers global wholesale, specialty, and (re)insurance intelligence that enables you to act first. Redeem your complimentary 14-day trial for more premium content from Insurance Insider.

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