Duke Royalty invests another EUR 1.1m in Irish broker BHPC

(Sharecast News) - Alternative capital provider Duke Royalty announced a follow-on investment of €1.1m (£1m) into its existing royalty partner, BHPC Limited, doing business as BHP.
The AIM-traded firm said BHP is an Ireland-based brokerage specialising in the niche not-for-profit insurance space, and had performed "resiliently" through 2020.

It said the funds would provide growth capital to BHP, which would position the business for the 2021 year as Ireland recovered from Covid-19.

The upsize would be completed on the same terms as the existing facility, which would be accretive to the Duke portfolio as a whole.

Since the SIL acquisition of BHP, Duke said merger and acquisition activity in the Irish broker market had increased materially, pushing acquisition multiples increasingly higher.

The capital and the business growth it would facilitate would further increase the equity value that Duke believed existed in the business, and where Duke was a 10.5% equity shareholder.

Duke said its original investment into BHP via Capital Step in August 2019 totalled €4.6m, with the new investment increasing its invested capital to €5.7m.

As a result of "resilient performance" during the pandemic, BHP was expected to achieve full-year profitability roughly in-line with its pre-Covid-19 budget

Duke said its monthly royalty payments had been unaffected during the 2021 financial year.

"We are delighted to be making this follow-on investment into BHP and further strengthening the company's balance sheet," said chief executive officer Neil Johnson.

"BHP operates in a sector with healthy merger and acquisition activity, currently transacting at multiples well above where BHP was acquired in the original Duke transaction.

"We believe BHP has real equity value and Duke will participate in that upside."

At 1100 GMT, shares in Duke Royalty were up 5.71% at 31.45p.