Direct Group Eyes Growth After Refinancing
06/10/2009 09:00:00 by Marketing
Direct Group, the fast-growing insurance services provider, has completed a major debt refinancing to provide further funding for the group’s market consolidation strategy.
The facilities, arranged by Lloyds TSB Corporate Markets Acquisition Finance, will enable Direct Group to capitalise on acquisition opportunities across the sector as well as fund its organic growth plans.
As part of the refinancing, Direct Group has also moved its banking relationship to Lloyds TSB Corporate Markets.
Last year, Yorkshire-based Direct Group, which was backed by private equity company LDC in 2007, completed its maiden acquisition of Millennium Insurance, a Midlands provider of general insurance solutions to the mortgage broker and IFA market.
In January this year, it took over the claims handling and administration business of MetLife’s UK protection arm as part of a five year deal, followed in April by the transfer of Nexus and Travel Protection Services (TPS) - the claims administration businesses within Longhawk Group (previously UK Underwriting).
The company’s offering now includes market-leading products and services across the general insurance market, including product development, sales and premium collection, policy administration, claims management, reporting and performance management.
Derek Coles, Chief Executive Officer of Direct Group, said: “Our clients are looking to partner with organisations that can support an increasingly broad range of requirements across their personal and commercial lines and across an increasingly complex set of distribution channels and platforms, while delivering consistently high service standards and real innovation.
“Since the original management buyout, our strategy has been to deepen our offering to the market, by enhancing and investing in our own service proposition and through the acquisition of complementary businesses. This is paying dividends, with the group reporting a strong pipeline and trading performance in the year to date.”
He added: “The years ahead present a unique opportunity to accelerate that strategy and we’ve been working closely with the team at LDC and their colleagues in Lloyds TSB Corporate Markets Acquisition Finance to put a financial structure in place to support that vision for growth.”
Ray Stenton, Director of LDC – which invested £21.3m in the business to support the management buyout - said: “There is a growing number of good quality assets coming onto the market, both independents and disposals from larger corporates, who need to build scale and depth in order to compete. Direct Group has the infrastructure, reputation, business model and strength of management to emerge as the market leader in fast-consolidating sector.”
Debt facilities were arranged by Mark Blower, Director of Lloyds TSB Corporate Markets acquisition finance.
Mark Blower said: “Through the combined support of the Lloyds Banking Group, we’re keen to ensure Derek and his team have the financial support to deliver their growth strategy.”
The refinancing follows several investments by LDC in the insurance support services market, including an £11million investment in the management buyout of Homeserve Emergency Services, a provider of home emergency fulfilment services, earlier this month (24 September).
In June, the private equity firm also backed the £19.95million management buyout of Ansa and Independent Inspections, both market leading providers of claims validation, management and fulfilment services on behalf of leading insurance companies.
Legal advisors to LDC and management were DLA Piper (Neal Shepherd).
Issued on behalf of LDC by Citypress.
Direct Group notes to Editors:
1.Direct Group aims to be a leading insurance services provider to the UK financial services marketplace. This vision is based around a philosophy of “treating customers and partners as we would expect to be treated ourselves”. The high quality of service offered by Direct Group is supported by a scalable and robust business platform which not only provides Clients’ and Insurers’ with unparalleled quality of management information but also provides the basis for expansion into new products and new market sectors.
2.Direct Group currently operates on a business-to-business basis by offering products to financial institutions, corporates and affinities plus a range of servicesacross the insurance industry. The services typically offered by Direct Group include product design, account development and training, policy administration, premium collection, claim handling, sales and service, insurer and captive reporting.
3.Direct Group Limited is authorised by the FSA no. 307332.
LDC notes to Editors:
1.LDC (Lloyds TSB Development Capital) is part of the Lloyds Banking Group and is authorised and regulated by the Financial Services Authority.
1.LDC (Lloyds TSB Development Capital) is part of the Lloyds Banking Group and is authorised and regulated by the Financial Services Authority.
2.LDC has, since 1981, completed over 400 investments, has ongoing interests in over 60 businesses across the UK.
3.LDC back ambitious management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions.
4.LDC invests in a broad range of sectors and has particular experience in financial services, healthcare, industrials, IT & software, leisure & media, retail & consumer, and support services.
5.LDC is the leading private equity company in the UK mid-market. Recent transactions include investments with 1ST – The Exchange, Ansa / Independent Inspections, Cranswick Pet & Aquatics, Modelzone, Nuclear Engineering Services Limited, Quantum Specials, and Snell Limited plus exits from ATP, ghd and Telecom Service Centres.
6.LDC has fourteen offices – Aberdeen, Amsterdam, Birmingham, Bristol, Edinburgh, Hong Kong, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham, Reading and Southampton.
7.For further information, visit www.ldc.co.uk.
