Brightside Agrees To Private Equity Takeover; Pretax Profit Declines

LONDON (Alliance News) - Brightside Group PLC Thursday said it has reached deal to be acquired by a fund advised by specialist European financial services private equity company AnaCap LLP, as it reported a 36% decline in pretax profit in its last financial year.

The specialist insurance broker said the 25 pence a share deal with AnaCap Financial Partners II values it at about GBP127.0 million. AnaCap Financial Partners II is a fund ultimately managed by AnaCap FP GP II Ltd, which is advised by European private equity firm AnaCap LLP.

The acquisition will be financed entirely through funds managed by AnaCap FP GP II Ltd.

Brightside revealed the agreement alongside 2013 earnings, which showed that pretax profit fell to GBP11.2 million, from GBP17.5 million a year earlier. Revenue fell to GBP88.6 million, from GBP91.2 million, while administrative expenses increased to GBP49.0 million, from GBP44.1 million.

The specialist insurer said profitability and income fell due to the available insurance underwriting capacity providing less competitive rates. This resulted in lower income per policy sold and an increase in the proportion of policies sold through affinity brands, which attract higher commission rates.

Brightside said the capacity problems arose from the reduction in trading with Southern Rock, which provided more than 40% of gross written premium in 2012, and the approach from Markerstudy which led to other insurers adopting a wait and see approach before offering capacity to the broker.

As a result of the developments, Brightside raised about GBP6.5 million net of expenses in a new share placing in January in order to prevent a short term cash squeeze at the year end. Brightside said it is now in "advanced negotiations" with its bankers with a signed agreement in principle to extend the terms of the premium finance facilities through to August 2015.

Belvedere Bidco Ltd, a vehicle indirectly owned by AnaCap Financial Partners II, has received irrevocable undertakings to vote in favour of the move from the directors of Brightside and a number of shareholders, including Schroder Investment Management Ltd, Markerstudy Holdings Ltd, and Stena Investment sàrl.

All in all, the vehicle has received undertakings in respect of 270.2 million shares, some 53.83% of the company's shares.

Brightside's independent directors consider the terms to be "fair and reasonable", according to the specialist insurance broker. The independent directors were advised by Cenkos, its broker.

"We are looking forward to partnering with the AnaCap team and working together over the coming years. We have significant ambitions for Brightside and its future prospects and growth potential and see AnaCap as an ideal partner with equally large ambitions for the future potential of Brightside," Paul Williams, chief executive, said in a statement.

The offer comes after a difficult 2013 for Brightside, during which it was the subject of takeover interest from shareholder Markerstudy. Brightside terminated talks after Markerstudy indicated it was considering making an offer in the range of 20-22 pence per share, which the company thought undervalued the business.

Brightside shares Thursday rose to 24.00 pence, up 27.2%.

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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