19 February 2024
B.P. Marsh & Partners
Plc
("B.P. Marsh", the "Company"
or the "Group")
Trading
Update
The Directors of B.P. Marsh &
Partners Plc (AIM: BPM), the specialist venture capital investor in
early stage financial services businesses, are pleased to provide
the market with an update on trading for the Group's year to 31
January 2024.
Highlights
·
Three disposals of investments were agreed during
the year for an aggregate upfront cash consideration of
£93.3m
·
Three new investments during the year were
made - Ai Marine Risk Limited, Pantheon
Specialty Limited and Verve Risk Services Limited
·
Group funds stood at £40.5m as at 31 January 2024
compared to £12.1m at 31 January 2023
·
Agreed distribution of £6m in dividends over the
next three years which is a considerable increase on previous
dividend policies
·
The Group currently has a robust pipeline of
potential new investments
·
The Group is debt free
The Group remains positive regarding
its ongoing performance and will be releasing its Annual Results
for the year to 31 January 2024 on 11 June 2024.
Net Asset
Value
One of the Group's key financial
objectives is the delivery of long-term growth in Net Asset Value.
The Group increased its Net Asset Value from £190m to £204m in the
six months ended 31 July 2023.
Dividend and Share
Buy-Back
Dividend
During the year to 31 January 2024
the Company distributed £2m in dividends to shareholders, including
a special dividend in November 2023, following the receipt of funds
from the sale of its stake in Kentro Capital Limited.
As previously announced, the Company
will pay an Interim dividend of 2.68p per ordinary share, or £1m in
the aggregate, on 18 March 2024 to all shareholders on the Register
as at 16 February 2024.
The Group also intends to pay a
further dividend of £1m as a Final Dividend in July 2024 subject to
shareholder approval.
On 23 January 2024 the Company
announced its future intention to double its annual dividend
payments to £4m per year for the financial years ending 31 January
2024, 2025 and 2026. These distributions will be payable in the
immediately subsequent years and remain subject to the anticipated
completion of the Sale of Paladin Holdings Limited.
The Directors believe that this
dividend policy strikes the right balance between rewarding
shareholders for the recent disposals within the
portfolio, whilst also retaining an appropriate amount of cash to
support the existing portfolio and for making new
investments.
Share Buy-Backs
In accordance with the terms of the
share buy-back policy first announced on 16 January 2023 and
updated throughout the year, the Company carried out a successful
share buy-back programme during 2023. In total, the Group acquired
approximately £1m of shares from the market, at a significant
discount to the Net Asset Value.
This has been a useful means of providing
additional shareholder returns and increasing liquidity in the
trading of the Company's shares.
Since the Group commenced its
buy-back policy in 2012, the Group has acquired 601,660 shares in
the Company for a total cost of £1.6m, at an average price of
£2.66p per share. This represents a discount of 53% to the
Company's Net Asset Value as at 31 July 2023.
Further to the Company's
Use of Proceeds of Sale and Strategy Confirmation
announcement in June 2023, the Board confirms its intention to
allocate further funds of up to £6.0m to an ongoing Share Buy-Back
programme. Following discussions with our advisers and feedback
from material shareholders, and considering general market
sentiment, the Board does not believe that conducting a large scale
return of capital transaction such as a Tender Offer to be the best
route forward for the Company at this time. As such, when it is
possible to do so, the Company will continue to undertake on-market
buy backs to return further capital to shareholders.
Summary
Since the commencement of the
Group's Dividend and Share Buy-Back policies, £12.8m has been paid
out in dividends and a further £1.6m has been returned through
share buy-backs. The total capital returned to date, through
dividends and share buy-backs, therefore represents approximately
54% of the total capital raised by the Company since flotation in
2006.
Disposals
Paladin Holdings Limited ("Paladin")
/ CBC UK Limited ("CBC")
In December 2023, the Group agreed
to sell its shareholding in Paladin, the parent company of CBC, the
London-based Insurance Broker, to Specialist Risk Group Limited
subject to regulatory approval.
Upon completion, the Group expects
to receive at least £41.8m in cash (net of all transaction costs)
representing a 37% uplift on the Group's latest valuation of the
investment as at 31 July 2023. Additionally the Group will receive
repayment in full of its £5.9m loans to Paladin, resulting in an
aggregate cash receipt of £47.7m.
The sale represents an expected
Internal Rate of Return of 45% at completion.
LEBC Holdings Limited ("LEBC") /
Aspira Corporate Solutions Limited ("Aspira")
In November 2023, the Group
announced that LEBC, in which the Group has a 59.3% shareholding,
had agreed to sell its wholly-owned subsidiary Aspira to Titan
Wealth Holdings Limited ("Titan"), subject to regulatory
approval.
LEBC will receive proceeds of sale
over a three year earn-out period. The Group's expectation is that
this will be at least in line with the Company's most recently
published valuation of LEBC as at 31 July 2023, of £15.9m.
Additionally, the Group expects to receive repayment in full of its
outstanding loans with LEBC, a total of £3.3m.
This transaction will also allow
LEBC to meet its obligations, as agreed with the Financial Conduct
Authority, regarding historical defined benefit pension transfer
advice.
Kentro Capital Limited
("Kentro")
In October 2023, the Group confirmed
that the sale of its 18.38% stake in Kentro to Brown & Brown,
Inc had completed, delivering sale proceeds of £51.5m.
This disposal produced an Internal
Rate of Return of 23.66% (inclusive of all income and fees) and a
money multiple on the Equity Investment of 3.41x.
B.P. Marsh originally invested in
Kentro (then known as Nexus Underwriting Management Limited) in
August 2014, with an initial equity investment of £1.5m for a 5%
shareholding. During the Group's nine-year investment in Kentro, a
further £13.6m of capital was provided,
increasing the Group's shareholding to 18.7%, thereby becoming
Kentro's largest single investor.
This capital, alongside bank
financing, allowed Kentro to commence its acquisitive growth
strategy, growing to a business that produces in excess of £500m of
Gross Written Premium out of nine countries and employing over 350
staff.
The Group's original equity holding
of 5% shows flexibility in our investment model, building our
equity stake over time, and exemplifies our
ability to identify and structure niche opportunities, assisting
successful management teams to create long term value.
New
Investments
During the Group's financial year to
31 January 2024, three new investments were completed.
The Group is confident that the
three new investments as outlined below will deliver on their set
goals, producing long term growth.
Ai Marine Risk Limited ("Ai Marine")
- London - December 2023
A start-up Managing General Agency,
which specialises in Marine Hull insurance and will underwrite a
global portfolio of business.
The business was established by its
co-founders, Tom Fulford-Smith and Charles D'Alton, who are
experienced marine insurance specialists with a track record of
delivering growth.
B.P. Marsh subscribed for a 30%
shareholding, providing £1.6m of funding via a mixture of equity
and a loan facility.
Since inception, Ai Marine has
performed in line with the Group's expectations, writing business
from day one.
Pantheon Specialty Limited
("Pantheon") - London - June 2023
A start-up insurance broker, led by
Rob Dowman, a recognised leading London Market broker, specialising
in complex placements worldwide.
B.P. Marsh subscribed for a 25%
stake in Pantheon and, since investment, the Group has provided
Pantheon with a loan facility of £4m.
This provision, alongside Pantheon's
strong performance to date, has allowed the business to make a
number of key hires, continuing Pantheon's strategy to build a
market leading independent specialist broker across multiple
markets.
Verve Risk Services Limited
("Verve") - London - April 2023
A Managing General Agency, which
specialises in Professional and Management Liability business for
the insurance industry in the USA, Canada, Bermuda, Cayman Islands
and Barbados.
Verve was established in 2016, by
its founders Scott Simmons and Alan Lambert, both of whom have over
20 years' experience underwriting U.S Professional and Management
liability insurance.
B.P. Marsh subscribed for a 35%
shareholding through the provision of £1.0m of funding via a
mixture of equity and a loan facility, which was drawn down in full
upon completion as part of a management buy-out.
Since investment, Verve has
performed well, and in line with our expectations for the 10 months
following the involvement of B.P. Marsh.
Follow on Funding and
Investments
XPT Group Limited ("XPT") -
USA
In October 2023, the Group provided
a further $3.5m (£2.9m) of funding to XPT, subscribing to a new
issue of Preferred shares. This further funding increased the
Group's shareholding in XPT to 29.93% from 27.3%. The Group also
provided a $4m Term Loan in February 2023.
This further funding, alongside
continued support from bank financing, has allowed XPT to continue
to grow, both organically and via acquisitions.
As has been previously reported, XPT
has made 15 business acquisitions since the Group invested in 2017.
XPT now has offices in nearly 20 locations across 13 States, acting
for insureds across all of the USA.
Over the course of the Group's last
financial year, XPT made two acquisitions, Cal Inspection Bureau, a
premier underwriting survey and audit business, and Craig and
Leicht, a Texas-based wholesale agency. Both businesses have
integrated successfully into XPT and have performed well since
their acquisition.
XPT have also made a number of
individual and team hires, which are outlined as
follows:
·
An experienced binding & brokerage team, based
out of Philadelphia, to fuel XPT's expansion;
·
A number of new property and casualty brokers, to
bring about substantial growth across these business lines,
including (but not limited to), commercial property, contractors,
workers compensation, farm & ranches and the hospitality
industry.
Overall, XPT Group continues to grow
via its acquisition strategy, producer hires and underlying organic
growth.
Other Investee Company
Highlights
Lilley Plummer Risks Limited ("LPR")
- London
LPR continues to perform well, due
to both the growth of its underlying marine portfolio and
diversification into different classes of business.
Throughout the Group's financial
year, LPR made several strategic hires to support growth. Such
hires have allowed LPR to enter the North American property and
Accident & Health space, whilst also bolstering its existing
marine broking operations.
These strategic hires are part of
LPR's on-going strategy to build the business into a multi-line
specialist insurance broker.
Aligned with this vision, LPR
actively explores new opportunities in the market, whether through
team hires or mergers and acquisitions, as part of its commitment
to achieving accelerated growth. This expansion is not confined to
its core marine offerings but extends into new diverse sectors of
the insurance industry.
Stewart Specialty Risk Underwriting
Ltd ("SSRU") - Canada
SSRU continues to deliver specialist
insurance products to a wide array of clients in the Construction,
Manufacturing, Onshore Energy, Public Entity and Transportation
sectors.
Since its inception in 2017, SSRU
has demonstrated robust growth and anticipates surpassing CA$ 100m
in Gross Written Premium in 2024.
This performance has been brought
about by continuous organic growth across SSRU's
highly profitable business lines. Growth has been
further powered by expanded line sizes made possible through
strengthened relationships with both existing and new capacity
partners.
Recently, SSRU entered into a new
partnership with the Sompo Japan Insurance Inc. (Canada Branch),
introducing increased capacity within their Commercial Property
and Residential Realty product
offerings.
New
Business
B.P. Marsh is well-known in the
financial services sector in which it specialises, with a focus on
Insurance Brokers and Managing General Agencies.
The Group continues to focus on
deploying start-up/early stage capital to these types of
investments. The Group is able to utilise its significant
experience and expertise to support long term growth; an approach
which has delivered meaningful shareholder returns since flotation
in 2006.
As such, the Group continues to see
a high number of potential new business opportunities, having
received 71 new business enquiries in the year to 31 January 2024,
increasing from 60 received enquiries in the preceding year.
The Group currently has 11 potential
opportunities actively under review to consider during the first half of 2024, all of
which are in the insurance heartland upon which we
focus.
Insurance Market
Outlook
The ongoing consolidation trends in
the Insurance Market show no indication of abating in 2024. Such
activity remains a catalyst for substantial prospects for the
Group, both in terms of new investments and activity within our
core portfolio.
Both the Group and its portfolio
companies continue to be approached by entrepreneurial individuals
and teams who do not wish to be part of this consolidation
process.
Liquidity and Loan
Portfolio
Group funds were £40.5m as at 31
January 2024 increasing from £4.3m as at 31 July 2023.
Between 31 July 2023 and 31 January
2024, the Group made realisations of £52.3m of which £51.5m related to the sale of Kentro.
The Group's loan portfolio balance
increased from £18m as at 31 July 2023 to £29m at 31 January
2024.
During the six-month period to 31
January 2024 the Group provided aggregate new loans of £12.2m, of
which:
-
£5.7m was provided to the investment portfolio,
including £4.0m to Pantheon, £0.8m to Paladin, £0.5m to Ai Marine
and £0.3m to a wholly-owned subsidiary of
LEBC Holdings Limited;
- £6.0m was
provided to Alchemy Underwriting Limited in connection with the
Group's agreed sale of its investment in Paladin; and
- £0.5m was
provided to Brown & Brown (Europe) Holdco Limited as part of
the Group's sale of its investment in Kentro.
The Group also received £1.1m in
aggregate loan repayments since 31 July 2023.
The Group is debt free.
For
further information:
B.P. Marsh & Partners Plc
|
www.bpmarsh.co.uk
|
Brian Marsh OBE
|
+44 (0)20 7233 3112
|
|
|
Nominated Adviser & Broker
Panmure Gordon
|
|
Atholl Tweedie / Stephen Jones /
Amrit Mahbubani / Ailsa MacMaster
|
+44 (0)20 7886 2500
|
|
|
Financial PR & Investor Relations
|
|
Tavistock
|
bpmarsh@tavistock.co.uk
|
Simon Hudson / Tim Pearson / Katie
Hopkins
|
+44 (0)20 7920 3150
|
Notes to Editors:
B.P. Marsh's current portfolio
contains fifteen companies. More detailed descriptions of the
portfolio can be found at www.bpmarsh.co.uk.
Since formation over 30 years ago,
the Company has assembled a management team with considerable
experience both in the financial services sector and in managing
private equity investments. Many of the directors have worked with
each other in previous roles, and all have worked with each other
for approaching ten years.
- Ends
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