Cinven to acquire Premium Credit
European private equity firm Cinven today announces that it has reached an agreement to acquire Premium Credit ('Premium Credit' or 'the Company'), the UK specialty finance provider, for an enterprise value of £462 million.
Premium Credit plays an important part in the UK economy enabling businesses and individuals to spread the cost of their insurance premiums and other essential purchases. It also provides financing for the payment of annual fees such as professional fees, membership subscriptions, commercial service charges and school fees. In 2013, the Company achieved gross advances of £3.7 billion, processing 25.8 million transactions. Premium Credit has approximately 2 million customers and works with 4,000 intermediaries.
Cinven's Financial Services team regards Premium Credit as an attractive investment given:
- UK specialty finance is an attractive growth market;
- Premium Credit is the UK's leading provider of premium finance with an attractive and diversified customer base, broad distribution network and good reputation for customer service;
- the Company has excellent risk management capabilities and a well-invested IT platform;
- a track record of strong financial performance through the economic cycle with a highly cash generative model; and
- the Company's platform is well positioned to execute a strategy of building a diversified UK specialty finance business through organic expansion into new products and selective acquisitions.
The experienced management team will continue to be led by Andrew Doman, Chief Executive, who joined the business in November 2012. Premium Credit, established in 1988 and headquartered in Epsom, Surrey, UK, employs over 300 people.
Maxim Crewe, Partner at Cinven, commented:
"Premium Credit is the market leader within the UK insurance premium finance market with strong risk management, cash generative characteristics and a proven management team. The Company provides us with an exciting platform from which to capitalise on growth opportunities in the broader UK specialty finance market through the expansion of the Company's existing product portfolio, new product launches and selective acquisition opportunities.
Peter Catterall, Partner at Cinven, added:
"Premium finance is a key source of funding for consumers and small businesses purchasing compulsory insurance products, such as motor, home or fire insurance. Premium Credit has a strong track record of delivering a valuable product with high levels of customer service.
"Cinven has a successful track record of acquiring financial services businesses, including Partnership, Avolon, Guardian Financial Services and Heidelberger Leben. We look forward to working with the team at Premium Credit to capitalise on growth opportunities whilst continuing to provide its customers and intermediaries with first class service and product."
Andrew Doman, Chief Executive of Premium Credit, said:
"Premium Credit has delivered strong performance since the carve-out from Bank of America. We have consistently achieved high levels of customer service and built on our good reputation for product expertise amongst intermediaries. We are delighted to be working with Cinven who, given their strong track record and expertise in the UK financial services sector, will be instrumental in helping to expand the Premium Credit platform providing our clients with new products and services."
GTCR is selling Premium Credit. Completion of the transaction is subject to customary antitrust approvals.
Advisers to Cinven on the transaction were: Bank of America Merrill Lynch (financial), Oliver Wyman (commercial), Freshfields (legal) and Ernst & Young (due diligence).