Ardonagh in landmark deal to acquire Australian broker for A$2.3bn

Global broking heavyweight Ardonagh Group has agreed to acquire an Australian retail broking house, which operates 40 trading brands and manages over A$2.59 billion in global gross written premiums (GWP). The acquisition is valued at A$2.3 billion (approximately $1.51 billion). Ardonagh plans to finance the purchase through 50% equity and 50% debt.

Ardonagh has entered into a Scheme Implementation Deed (SID) to acquire all of the issued ordinary shares in ASX-listed PSC Insurance Group for A$6.19 in cash per PSC share pursuant to a scheme of arrangement.

Ardonagh intends to fund the transaction with approximately 50% equity from existing shareholders, Madison Dearborn Partners and HPS Investment Partners, and 50% debt including existing and new facilities. The transaction is expected to be near leverage neutral on a pro forma basis, management noted.

PSC is a diversified insurance services group which has over 40 trading brands and operations in Australia, the United Kingdom, Ireland, Hong Kong, Vietnam, New Zealand, and Bermuda employing 900 people and managing more than A$2.59 billion in global gross written premium.

It was founded in 2006 by chairman Paul Dwyer who will join the Ardonagh senior management team upon completion of the deal and work closely with the leadership teams in Australia and Ardonagh Specialty to integrate and grow the combined businesses.

Ardonagh intends to merge PSC’s Australia and New Zealand operations with Envest, which was acquired by the froup in February 2023, becoming one of Australia’s largest privately owned insurance distribution platforms, placing A$3.3 billion in gross written premium annually.

Envest CEO Greg Mullins will oversee the combined operations for Australia and New Zealand.

PSC’s UK operations will be merged into Ardonagh Specialty and Ardonagh Advisory, supporting its expansion in UK wholesale and retail broking.

The Scheme Cash Consideration represents an implied equity value of A$2.256 billion and enterprise value of A$2.429 billion, the company said.

Certain PSC directors and managers are rolling approximately 26% of their aggregate shareholdings in PSC into shares in The Ardonagh Group. The SID is subject to customary regulatory approvals. Entities controlled by PSC directors Paul Dwyer, John Dwyer, Brian Austin, Tara Falk and James Kalbassi have also entered into co-operation deeds with Ardonagh in connection with the deal.

Should the transaction not proceed, approximately A$22.6 million would be payable to Ardonagh, or a reverse break fee of approximately A$22.6 million would be payable to PSC.

David Ross, CEO of The Ardonagh Group, said: “The acquisition, which has secured the unanimous recommendation of PSC’s board, is a significant milestone in the global growth of Ardonagh and underlines our strong commitment to the markets we serve.

“Ardonagh has been assembled as a bastion of independence and scale, aligning high calibre businesses and management teams around quality advice for clients and entrepreneurial connectivity within the group. PSC’s journey and values align with our own and its portfolio of highly complementary businesses provides an abundance of opportunity to strengthen our positions in Australia, wholesale and specialty markets.”

Dwyer, chairman of PSC, added: “Today marks an important day in PSC’s history. This transaction recognises the quality and strength of PSC’s people and business that has developed over the last 18 years. We believe this transaction maximises value for PSC shareholders while also providing an excellent platform for growth for PSC employees and clients.”

Greg Mullins, CEO of Envest, added: “We are excited by the prospects announced today which we believe will deliver long term value for our customers, brokers and agencies. Envest and PSC are very aligned culturally, driving growth through the retention and development of talented people, and investment in a collection of distinct, independent brands led by local management teams.

“Together with Tony Robinson and the wider PSC leadership, we believe the scale and footprint we collectively bring to this next chapter is set to create huge opportunities to grow and innovate in the APAC region. Our clients remain the number one priority for both parties throughout this process.”

Andrew Wallin, Ardonagh Specialty CEO, said: “PSC’s Paragon and Carrolls teams have a fantastic track record in delivering high quality services and solutions across London and Bermuda. Their teams and capabilities are highly complementary with what we have built in Price Forbes, and their commitment to providing a boutique service to clients is perfectly aligned with our own.”

Paragon co-CEOs, Tara Falk and James Kalbassi said: “Combining with one of the largest independent specialty brokers in the London market is an exciting prospect for everyone at Paragon, with greater resources for our customers and the opportunity to deepen our relationships with Paragon and Ardonagh’s valued broker partners. It’s a formidable combination of two like-minded, client focused and entrepreneurial broking organisations – a compelling opportunity for our leadership teams to build the best-in-class broker.”

Ardonagh made its first acquisition in Australia in February 2021 with the purchase of Resilium Insurance Broking. It acquired Brisbane-headquartered Envest in February 2023 and merged both businesses into the Envest platform.

Since then, Ardonagh has backed Envest to complete over 30 acquisitions, building gross written premium to more than A$2.1 billion across Australia.

The Group places over $15 billion (A$23 billion) of premium globally on behalf of its clients and operates in 30 countries, with key platforms including MDS Group, a leading broker and risk management adviser across Portugal and Latin America, and Arachas in Ireland. Ardonagh also owns Price Forbes, an independent insurance broker in London, which places $7 billion (A$11 billion) of premium for wholesale clients annually.

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