GRP announces financial results and £200M acquisition war chest
GWP increases to £550m (2016: £400m)
Run rate income of £76m (2016: £45m)
Run rate EBITDA of operating entities £20.4m (2016: £12m), a 70% increase on 2016
War chest of £200m earmarked for further acquisitions.
Twelve acquisitions in 2017
“This has been a transformational year for GRP, following twelve acquisitions since March. We have plenty of firepower for more deals after securing a £200m facility from Ares Capital Europe and HSBC, and our very strong pipeline means we remain on track to reach our £1bn GWP target”. David Margrett, Chief Executive, GRP Ltd
Global Risk Partners Ltd (GRP), the specialist vehicle for acquiring brokers and MGAs, has joined the list of the top 20 largest brokers in the UK, following a stream of acquisitions in 2017.
Chief executive David Margrett said the team had received strong financial backing to continue its buy and build strategy and the market should “fully expect more of the same from GRP next year, on our way to becoming a £1bn GWP business.”
Commenting on GRP’s performance during the past 12 months, Mr Margrett confirmed that “GRP’s core focus has been on building out our regional hub strategy.”
“Marshall Wooldridge (North), Higos (South West), Greens (South East) and more recently Alan & Thomas (South) were foundation acquisitions. With our support and capital, local management teams have wasted no time in adding new businesses to their regional portfolios.”
Mr Margrett said: ‘Business owners like our owner-driver philosophy, where, in our major hubs, we make sure the key individuals who produce business and hold the client relationships retain an equity stake in the company we acquire.”
“It means that experienced executives can focus specifically on business growth and enhancing the service they provide their clients.”
He added that where acquired businesses held particular specialisms, GRP looks to cross-sell those specialisms throughout the group. “This process underscores our ambition to enhance our product proposition and improve outcomes for our customers.”
Turning to GRP’s London Market and MGA platforms, Mr Margrett said Lonmar and Ropner continued to show strong growth, both organically and through targeted recruitment.
GRP’s MGA segment continued to deliver a strong performance in 2017, with EBITDA more than doubling year on year. “Each of the businesses continues to grow in their respective marketplaces, based upon a service led proposition and providing specialist products to their broker panel and customer base.”
Mr Margrett added: “We retain our appetite to grow our MGA division through acquisition and recruitment, with our preferred targets having strong management teams, a specialist product range and robust underwriting performance.
GRP’s accounts to financial year-end 31 March 2017 report 141% growth in turnover to £41.2m (2016: £17.1m).
The accounting treatment of GRP’s financing costs, amortisation of goodwill and central finance and M&A costs relating to the Group’s acquisitions result in a pre-tax loss of £11.5m for the period (2016: £7.0m). In addition, a number of acquisitions were completed towards the end of the financial year and their impact is only partly included with the accounts as at 31 March 2017.
GRP secures new funding
Mr Margrett confirmed that Ares Capital Europe, the leading global alternative asset manager, has provided significant new funding in conjunction with HSBC as GRP’s banking partner. He said: “Our partnership with Ares gives GRP access to significant new capital which will be deployed to execute our ambitious growth strategy.”
The £200m funding is in addition to GRP’s equity capital, which is provided by private equity investor Penta Capital, chairman Peter Cullum and GRP management.
Peter Cullum, chairman, said: “We have brought some quality businesses into GRP and delivered strong organic growth, reflected by our excellent results this year. The Ares funding illustrates great confidence in GRP’s highly experienced management by making capital available to accelerate the current strategy.”
“We remain fully focused on building a high-quality portfolio of growth businesses and delivering value for customers, staff, insurer partners and investors.”