AUB Group completes Pacific Indemnity swoop

AUB Group completes Pacific Indemnity swoop | Insurance Business Australia

Insurance News

AUB Group completes Pacific Indemnity swoop

What are the implications of the acquisition to the company?

Insurance News

By
Jonalyn Cueto

AUB Group Limited (AUB) has finalized its acquisition of a 70% equity stake in Pacific Indemnity, a leading specialist underwriting agency based in Australia. The transaction was first announced in May, with the completion announced on Monday.

Per the announcement in May, AUB agreed to pay $105 million upfront, with an additional balance due 18 months later, contingent on Pacific Indemnity’s performance for the 2024-25 period. The total enterprise value of Pacific Indemnity was pegged at $192 million, representing a multiple of 13 times its FY23 EBIT.

The acquisition was expected to be funded through a fully underwritten institutional share placement, raising $200 million. This covered the initial payment, with the remaining $95 million allocated to support AUB’s mergers and acquisitions pipeline and the costs associated with the equity raising.

Post-acquisition, AUB’s net leverage ratio was expected to remain below 1.75x, with cash and undrawn debt facilities totaling approximately $400 million. According to AUB, the acquisition aligns with its strategy to enhance its agency portfolio, following its acquisition of wholesale broker Tysers in 2022 and a subsequent $150 million capital raise in 2023 for potential M&A activities.

“We are delighted to announce the acquisition of Pacific Indemnity, a high-calibre business with an excellent management team which has delivered impressive growth to date,” said Mike Emmett, AUB Group CEO and managing director. He said that the acquisition would enhance AUB’s scale, diversify its capabilities, and expand expertise in financial lines, presenting opportunities for mutual benefits across the group.

AUB Group Limited operates in approximately 570 locations globally, with a workforce of over 5,000 employees serving around 950,000 clients. The group places approximately $9.5 billion in insurance premiums with local and international insurers annually.

Do you have any thoughts about this story? Let us know in the comments below.