Howden Has $1.4 Billion for Growth, Could Tap New Investor for Extra Firepower *Centurion Insurance AFS*

Howden, one of the world’s largest privately owned insurance brokers, has 1.1 billion pounds ($1.4 billion) for growth, including acquisitions, and has had interest from potential new shareholders to back a large deal if needed, its management told Reuters.

The British group this week reported a 30% jump in core earnings to 780 million pounds in the year to September 30, 2023, partly driven by acquisitions. It also raised $6.1 billion in debt to refinance existing borrowings and raise cash.

After the refinancing, Howden has 1.1 billion pounds of cash on its balance sheet to spend on deals, hires and buying out employee shareholders, CFO Mark Craig said in an interview.

The company is focused on smaller “tuck-in” acquisitions of up to 150 million pounds in areas like the UK, continental Europe and Asia-Pacific, Craig and the group’s CEO and founder, David Howden, said.

It remains open to more transformational transactions, which could be partly financed by an external equity investor, they said.

“That strategy is something that we would definitely be open to,” Howden said when asked about the prospect of new investors joining the company.

“We’ve got a lot of people knocking on the door,” Craig added.

Insurance broking remains an active corner of the M&A market despite a slowdown in global deal volumes amid high interest rates.

Insurance broking deals in Europe increased by 19% to 229 in the first half of last year, many of which were backed by private equity, according to a report by FTI Consulting.

Howden alone completed 56 acquisitions worldwide over the course of 2023, including a tie-up with reinsurance specialist TigerRisk.

The group, formerly known as Hyperion, secured a minority investment from buyout group General Atlantic in 2013 and Canadian pension fund CDPQ and private equity firm Hg have also made investments in the following years.

More than 4,000 employees control about a third of the group, according to its website.

Asked about a future exit for the company’s institutional backers, Howden said he did not expect them to leave for the time being, having injected fresh capital into the business last year to support growth.

An initial public offering could be an option in the future, he said.

($1 = 0.7943 pounds)

(Reporting by Pablo Mayo Cerqueiro in London; editing by Anousha Sakoui, Jane Merriman and Chizu Nomiyama)