January 2007

Broker seeks funds as war chest dries up

Ed Vinales

Giles Insurance Brokers has revealed that it will ask the financiers behind last year's £45m private equity backed management buy-out for further funding by June this year.

The announcement from the ambitious broker consolidator comes just six months after the MBO, while it is working on closing several £3m to £5m acquisitions.

Giles hopes to complete these deals by May, after which it will approach Gresham private equity and Clydesdale bank for more cash.

It is not known how much it is hoping to receive.

Giles expects the current targets to exhaust the remainder of its £20m war chest and necessitate further investment if it is to meet its stated target of £250m premium income by the end of 2008.

Chris Giles, the broker's chief executive, said: "We are currently focused on acquiring businesses rather than recruiting teams.

"We are doing a regional roll-up and expect the £20m war chest to be exhausted by April or May, when we will have signed heads of agreement on two or three deals. At that time we'll be looking for further investment."

Explaining the company's acquisition strategy, he added: "We work on two or three deals at a time, then integrate them into Acturis (platform). We're looking to make five or six acquisitions a year, each between £3m to £5m."

Gresham and Clydesdale shared the £45m invested in Giles last summer, with the latter providing the debt funding. At the time of the MBO it was revealed that 'as part of the transaction, Giles has secured access to additional funding lines to make further acquisitions.'

Since last summer the broker has acquired three brokers, including the retail business of Miller insurance services, completed last month.

Gresham and Clydesdale own a third of the firm while Mr Giles, whose father founded it in 1967, also owns a third. The rest is split between management and staff.

Meanwhile, this week will see Bob Screen, the former founding managing director of Vega, join as new chief operating officer to work alongside Mr Giles in London. He takes over the role from Derek Gardner, who has moved to focus on the broker's merger and acquisition strategy

Post Magazine

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