TIDMBPM
RNS Number : 9643B
B.P. Marsh & Partners PLC
05 February 2020
5 February 2020
B.P. Marsh & Partners Plc
("B.P. Marsh", the "Company" or the "Group")
Trading Update
B.P. Marsh, the specialist investor in early stage financial
services businesses, is pleased to provide the following unaudited
trading update for the Group's year ended 31 January 2020.
Highlights
-- The completion of two new investments; Agri Services Company
PTY Limited in Sydney and Lilley Plummer Risks Limited in
London
-- GBP2m follow-on funding to Nexus Underwriting Management
Limited, as part of its wider GBP16m fundraising exercise
-- Loan Facility of US$2m to XPT Group LLC, based in New York
City, which also completed a successful US$40m refinancing exercise
with Madison Capital Funding LLC
-- The Group secured access to a GBP3m loan facility with attractive terms
-- As at 31 January 2020, cash of GBP0.8m and available cash of GBP3.8m
-- The Company continues to maintain a diverse portfolio of
investments, by sector, geography and currency, with 57% of the
investment portfolio's revenue originating from overseas
Net Asset Value
The latest published Net Asset Value ("NAV") was GBP130m, or
360.9p per share, as at 31 July 2019, which represented a 3%
increase, or a 4.3% increase including the dividend paid in July
2019, for the six months ended on that date. From its inception in
1990 until 31 July 2019 the Group has maintained an average annual
compound increase in NAV of 11.7%. The Group is expected to report
a positive performance for the financial year ended 31 January
2020.
The Company's Annual Results for the full year to 31 January
2020 and an updated NAV will be announced on Tuesday 9 June
2020.
B.P. Marsh remains focussed on taking actions to reduce the
differential between NAV per share and the current share price.
In the year ended 31 January 2020, as a sign of confidence in
the Company, nine Directors and Senior Management of the Group
purchased a net c.145,000 shares in the Company at market price.
Chairman of the Group, Brian Marsh, gifted c.2% of his direct
shareholding to the Marsh Christian Trust, a charitable trust he
founded in 1981, as he does every year.
Cash Balance
At 31 January 2020 the Group had access to cash of GBP3.8m. This
is inclusive of the undrawn GBP3m loan facility with Brian Marsh
Enterprises Limited ("BME"). As at 31 January 2020, the Group was
debt free.
In the financial year ending 31 January 2021, the Company is
expected to receive over GBP2.5m in loan repayments from its
investee companies, which will assist the Group to continue to
pursue its core investment objectives.
As previously announced, during the year, the Company explored
short, medium, and long-term funding options so that it could
continue to take advantage of new investment opportunities as they
are identified.
Having considered the available options, and taking account of
market conditions and the performance of its portfolio, the Group
entered into the GBP3m loan facility with BME, a company of which
the Chairman of the Group, Brian Marsh, is a Director and sole
Shareholder.
The loan facility provides the Group with access to further
investment funds at an interest rate of the higher of 4% or the UK
1-month LIBOR plus 3.25% and is available until 29 July 2021.
The Group considered these to be attractive terms when compared
to other avenues of funding.
New Investments
Ag Guard PTY Limited ("Ag Guard")
In July 2019, the Group completed an investment into Ag Guard,
based in Sydney Australia, a Managing General Agency specialising
in Australian Agriculture Insurance. The Group acquired a 36%
equity stake for up-front consideration of AU$1.47m (c.GBP0.8m),
with further consideration of AU$1.13m (c.GBP0.6m) paid in January
2020. This transaction represented the Group's fourth Australian
investment.
Founders Alex Cohn (Managing Director), Martin Birch (Technical
Director) and Ben Ko (Finance & Operations Director) have
considerable experience in the provision of general insurance
services in the Australian rural sector.
Lilley Plummer Risks Limited ("LPR")
In October 2019, the Group subscribed for a 30% equity stake in
the London based, Lloyd's Marine Broker LPR, the Group's third
Lloyd's Broker in its current portfolio. The Group invested GBP1m
by way of both redeemable and non-redeemable preference shares.
In the first three months of being operational, the founders,
Stuart Lilley and Dan Plummer, have been extremely active in
expanding the workforce and have more than doubled the number of
employees working within the organisation. LPR have both
strengthened their original marine operation and also hired new
members of staff, which have enabled them to diversify into new
product lines.
Mike Lilley joined from Chesterfield Insurance Brokers after 17
years of service, being appointed Chairman of LPR, and to open a
Treaty Reinsurance department.
Mike Gooding will be joining LPR from Guy Carpenter after 12
years of service, to head up the Terrorism and Political Violence
department.
Follow-on Investments and Funding
Nexus Underwriting Management Limited ("Nexus")
Nexus is one of the largest independently owned Managing General
Agency in the UK insurance market, budgeting to write over GBP345m
of Gross Written Premium across various specialty lines in the 2020
financial year.
In March 2019, Nexus launched Xenia Broking Group Limited, a new
entity which consolidated Nexus' trade credit broking activities
and will remain independent and segregated from Nexus' underwriting
operations. Nexus is now one of the leading independent UK trade
credit brokers, having a c.10% market share of the c.GBP350m Gross
Written Premium trade credit market.
In April 2019, the Group provided Nexus with a GBP2m revolving
credit facility, as part of a wider GBP16m fundraising exercise, in
order to undertake M&A activity.
Nexus has acquired Credit & Business Finance Limited,
Capital Risks MGA Limited and Plus Risk Limited in the past year.
These acquisitions demonstrate Nexus' M&A strategy and the
company continues to explore value accretive acquisition
opportunities.
In September 2019 Nexus announced the appointment of Andrew Moss
as independent Non-Executive Chairman on Nexus' main board as part
of its strategic growth plan. Andrew has had a long and
distinguished career within the insurance industry including five
years as Group CEO of Aviva Plc, and prior to this he spent four
years as Director of Finance, Risk Management and Operations at
Lloyd's of London. In 2014 he joined Parker Fitzgerald, the London
based Management Consultancy, as Chairman of the Advisory Board
where he helped steer their recent acquisition by Accenture to its
successful outcome.
In January 2020 Nexus Specialty Inc., part of their US platform,
established a wide-ranging new programme agreement with A-rated
Crum & Forster, that allows Nexus to underwrite their market
leading trade credit products on a fully admitted basis in the
US.
XPT Group LLC ("XPT")
Since investment in 2017, XPT the specialty lines distribution
company, has made numerous acquisitions, providing it with a
footprint across the US with offices in North Carolina, Texas,
California and New York. From a standing start in 2017, it is now
forecasting annualised Gross Written Premium of US$260m for the
2020 year.
In April 2019, the Group provided XPT with a US$2m Loan
Facility.
Later that year XPT successfully secured US $40m of aggregate
funding from Madison Capital Funding LLC ("Madison"). As part of
the transaction, Madison took an equity interest in the business
which values XPT at an enterprise value of c.US$54m. Madison is
backed by the financial strength and stability of New York Life
Insurance Company and has $10.6 billion of assets under management,
exclusively investing alongside private equity sponsors and other
investors.
Portfolio Highlights
UK
CBC UK Limited ("CBC")
CBC continues to deliver strong growth, with the year ending 31
December 2019 expected to report revenue of GBP7m and EBITDA of
GBP1.7m. This result represents an increase of c.20% in revenue and
c.50% in EBITDA over the year.
CBC have successfully established an International Division for
professional lines, further expanding its product offering.
EC3 Brokers Limited ("EC3")
Over the course of the year EC3 has made several new team hires,
establishing both a North American Property Division and a Sports
and Entertainment Division. This further diversified EC3's product
offering. The management team at EC3 continue to explore further
value accretive hires and acquisitions.
In May 2019, James Murphy joined EC3 as Head of Broking having
had many decades' experience in the London Insurance Market,
starting his career at Nelson Hurst & Marsh, then as part of
the management team of a Lloyd's broker that was subsequently
acquired by Willis. Following on from this, EC3 expanded its UK
Contingency & Entertainment division with three senior hires,
helping it towards its goal of becoming the pre-eminent independent
entertainment insurance broker in the London Market.
In August 2019, EC3 established a North American Property
division, headed up by Matt and David Jeffery, with further hires
thereafter. These two individuals have over three decades of
combined experience in the London Market with senior roles at
Jardine Lloyd Thompson, Cooper Gay and Besso.
Since investment in December 2017, EC3 has grown its top line
revenue from c.GBP9m to a 2020 budget approaching GBP14m.
The Fiducia MGA Company Limited ("Fiducia")
Fiducia, the UK Marine Cargo Underwriting Agency established in
November 2016, has grown from a start-up position to Gross Written
Premiums of GBP12m for the year ending 31 December 2019, across the
Marine Specialty Insurance Sector.
In January 2020, Fiducia expanded their product offering with
the establishment of a Fine Art and Specie division, headed up by
James Bavin. James was previously head of Marine at Advent Capital.
This new division is supported by underwriting capital from Lloyd's
of London to complement Fiducia's existing product offering.
LEBC Holdings Limited ("LEBC")
On 2 September 2019 the Group announced that LEBC Group Ltd, a
UK-based IFA and 100% owned subsidiary of LEBC, had agreed to
voluntarily cease the provision of Defined Benefit transfer advice.
This was pursuant to the FCA's market-wide review of the Defined
Benefit transfer market.
Advice in the Defined Benefit transfer market represented 15% of
LEBC's audited consolidated total revenue in its previous financial
year, ended 30 September 2019. This impacted the Group's valuation
of its 59.3% equity interest in LEBC, which was reduced to GBP23.9m
at its most recent valuation for the period ending 31 July
2019.
LEBC has implemented a significant restructuring and is working
on a number of new initiatives. In line with its successful
long-term investment strategy, the Group continues to support
LEBC.
LEBC continues to offer a full range of private client and
employee benefit advice and is focussed on growing the business in
these areas and investing in technology and recruitment, to
continue to meet a growing demand for advice from private
individuals and companies.
Canada
Stewart Specialty Risk Underwriting Limited ("SSRU")
SSRU, the Toronto based provider of specialty insurance products
to the Construction, Manufacturing, Onshore Energy, Public Entity
and Transportation sectors, has secured a new Property offering.
SSRU has secured CA$15m of A-rated Canadian capacity to write
primary and excess Property products, tailored to individual
clients in the Natural Resources, Complex Commercial and
Construction segments.
As part of this new product offering, SSRU has appointed Heather
Jamieson as Vice President of SSRU's Property division.
Australia: ATC Insurance Solutions PTY Limited ("ATC"), Sterling
Insurance PTY Limited ("Sterling") and MB Prestige Holdings (PTY)
Limited ("MB")
The Group's established investments in Australia, ATC, Sterling
and MB continue to perform well, with all three investments
increasing their premium income and profitability in the year. This
results in an aggregate combined budget of approaching AU$150m in
premium income and AU$23m in commission income.
This performance, in a challenging insurance market, underpins
the quality of these companies and their management teams.
In September 2019, ATC partnered with the Lloyd's syndicate,
Talbot Underwriting (an AIG company), to provide a bespoke
insurance solution to the Australian SME sector. The Group welcomed
ATC's move into this fast-growing sector of the insurance
market.
In December 2019, Sterling announced further expansion of its
aviation division with the appointment of Greg Leeman, and
partnership with Tokio Marine Kiln in bolstering its product
offering in Aviation insurance.
Singapore
Asia Reinsurance Brokers PTE Limited ("ARB")
In December 2019, ARB appointed William Pang as Managing
Director, to oversee ARB's business portfolio and the teams across
ARB. William has 20 years of reinsurance experience, having worked
for Munich Re, ACR and JLT Re in various underwriting, broking and
senior management roles.
Additionally, in September 2019, Chiam Heng Lock was appointed a
Director of Reinsurance. Chiam has a wealth of experience in this
market, having previously worked at Willis Re, JLT Re, and worked
with Copenhagen Re and Everest Re for many years.
New Business Opportunities
B.P. Marsh is well known in the sectors in which it specialises
and the quantity of opportunities presented to the Group remains
high.
B.P. Marsh has a wide array of industry specific contacts with
whom the Group remains in regular contact, to drive germane and
high quality deal flow.
The financial year closed with a total of 117 new opportunities
having been presented to the Group during the year, in comparison
with 64 in the previous year. Of the 117, the majority were in the
insurance sector. The increase in opportunities over the past year
underpins our unique investment approach, with the Group continuing
to see significant deals in the Financial Services sector.
The Group is well positioned in its current financial year, with
a strong pipeline of new opportunities, a number of which should
develop over the course of the year.
The Group will remain disciplined in its approach to the
investment process, focusing on niche SME businesses in sectors
which the Group understands, with the aim of achieving considerable
short and long term growth.
In addition to this, the Group's investee companies continue to
seek and undertake bolt-on acquisitions.
For further information:
B.P. Marsh & Partners Plc www.bpmarsh.co.uk
Brian Marsh OBE / Harriett Osmond - Investor
Relations +44 (0)20 7233 3112
Nominated Adviser & Broker
Panmure Gordon (UK) Limited
Atholl Tweedie / Charles Leigh-Pemberton /
Ailsa Macmaster +44 (0)20 7886 2500
Financial PR
Tavistock Communications Limited bpmarsh@tavistock.co.uk
Jos Simson / Simon Hudson / Tim Pearson +44 (0)20 7920 3150
Notes to Editors:
About B.P. Marsh & Partners Plc
B.P. Marsh's current portfolio contains seventeen companies.
More detailed descriptions of the portfolio can be found at
www.bpmarsh.co.uk.
Since formation over 25 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.
Since its inception B.P. Marsh has delivered an average annual
compound increase in NAV of over 10% and this remains one of the
Group's core goals for future years.
- Ends -
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END
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