B.P. Marsh & Partners Plc (AIM: BPM), the specialist investor in early stage financial services businesses, is pleased to announce that XPT Group LLC (“XPT”), the U.S. based specialty lines insurance distribution company, has successfully completed a fund-raising exercise and complementary acquisition.
Fundraising
XPT has secured $40 million in aggregate financing from Madison Capital Funding LLC (“Madison”).
Madison, founded in 2001, is a market leader in providing middle market companies with debt solutions. Since inception Madison has invested $4 billion in 1,193 transactions with 305 different private equity sponsors. Madison is a leader in financing the insurance distribution segment.
As part of the transaction, Madison will take an equity interest in the business which values XPT at an enterprise valuation of circa $54m.
The financing provides XPT with an opportunity to make further acquisitions and enter the next phase of its growth. Upon completion with Madison, XPT will draw down $18m. This draw down will be to finance the acquisition detailed below and to repay an existing debt facility.
A further $22m finance facility is in place to support growth.
Acquisition
Simultaneously to the completion of the fundraising, XPT have acquired 100% of Sierra Specialty Insurance Services Inc. (“Sierra”). Sierra is an MGA and wholesale broker based in Fresno, California, and specializes in the provision of insurance to independent retail agents.
Sierra is led by President, Kathy Schroeder together with COO, Mark Schroeder. Both Mark and Kathy Schroeder have many decades of experience in underwriting, broking and management. Kathy has also served on the American Association of Managing General Agents Board, one of the two predecessors to Wholesale Specialty Insurance Association (WSIA). Both Kathy and Mark Schroeder will remain at Sierra post acquisition.
Following the investment by Madison in XPT and the acquisition of Sierra by XPT, B. P. Marsh will have a revised shareholding of 32.2% in XPT.
XPT continues to explore additional M&A opportunities in the U.S. that complement and enhance XPT’s product and distribution offering.
XPT’s Chief Executive Officer Thomas Ruggieri has stated that “XPT is fortunate to have quickly assembled a Partnership nucleus of expert specialists in Specialty Distribution financially backed by the two most experienced financiers supporting Insurance Distribution in BP Marsh and Madison Capital Funding. We look forward to continuing our industry leading organic growth by supporting our partners with new product, resources and customer service to attract the brightest client focused producers to our partnership.” He also noted “Kathy and Mark’s leadership in the industry and in central California will greatly enhance our partnership. Sierra Specialty reinforces XPT’s collaboration as they will partner in our existing product segments in general authority underwriting, transportation and hospitality, while moving us into agri-business.”
Commenting on the recent activity, the Group’s Chief Investment Officer and Nominee Director in XPT, Daniel Topping, said “The fundraising with Madison is a tremendous milestone in XPT’s development. Since XPT’s first investment in November 2017, XPT has grown to Gross Written Premium approaching $200m, inclusive of the Sierra acquisition. This is an outstanding achievement by the XPT team, and we look forward to further supporting their growth.”
About B.P. Marsh & Partners Plc
B.P. Marsh’s current portfolio contains nineteen 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 at least five years.
Prior to Brian Marsh’s involvement in the Company, he spent many years in insurance broking and underwriting in Lloyd’s as well as the London and overseas market. He has over 30 years’ experience in building, buying and selling financial services businesses, particularly in the insurance sector.
Alice Foulk joined B.P. Marsh in September 2011 having started her career at a leading Life Assurance company. In 2014 she took over as Executive Assistant to the Chairman, running the Chairman’s Office and established herself as a central part of the management team.
In February 2015 she was appointed as a Director of B.P. Marsh and a member of the Investment Committee. In January 2016 Alice was appointed Managing Director of B.P. Marsh.
In her position as Managing Director, Alice is responsible for the overall performance of the Company and monitoring the Company’s overall progress towards achieving the objectives and goals of the Company, as set by the Board.
Dan Topping is the Chief Investment Officer of B.P. Marsh, with over a decade of experience in the financial services sector. Dan graduated from the University of Durham in 2005 and is a member of the Securities and Investment Institute and the Institute of Chartered Secretaries and Administrators. Having spent two years at an independent London accountancy practice, he joined the company in 2007. He was appointed as a Director in 2011 and promoted to his current role in 2015.
Dan is a standing member of the B.P. Marsh Investment and Valuation Committees and currently serves as a Board Director across the portfolio.
Jonathan Newman is a Chartered Management Accountant and is the Group Director of Finance and has over 20 years’ experience in the financial services industry. Jon graduated from the University of Sheffield with an honours degree in Business Studies and joined the Group in November 1999, following two years at Euler Trade Indemnity and two years at a Chartered Accountants. Jon is a Member of the Chartered Global Management Accountants, the Chartered Management Accountants and the Chartered Institute of Securities and Investment.
Jon was appointed a Director of B.P. Marsh & Company Limited in September 2001, and Group Finance Director in December 2003 and was instrumental in the admission of the Group to AIM in February 2006. Jon is a member of the B.P. Marsh Investment and Valuation Committees and currently serves as a Nominee Director on the Boards of three Investee Companies, and provides senior financial support and advice to all companies within the Group’s portfolio as well as evaluating new investment opportunities.