B.p Marsh Regulatory News (BPM)

Date: 7 October 2021

B.P. Marsh & Partners Plc

("B.P. Marsh", "the Company" or "the Group")

Investee Company Update - XPT Group LLC

B.P. Marsh & Partners Plc (AIM: BPM), the specialist investor in early stage financial services businesses, is pleased to announce that XPT Group LLC ("XPT"), the U.S. based specialty lines insurance distribution company, has successfully completed a fund-raising exercise and complementary acquisition.

XPT to acquire S&H Underwriters, Inc.

S&H Underwriters, Inc. ("S&H") is a Managing General Agent and surplus lines broker and binding authority business based in Barre, Vermont. S&H works with retail clients in personal and commercial excess, surplus and speciality lines throughout New England and the Mid-Atlantic States.

S&H was founded in 1998 and was a family-owned business, with the owners Patrick and Betty Sikora remaining within the business post transaction, reporting to Kyle Stevens, who heads up XPT's binding and small insured business broking division.

S&H are budgeting to place Gross Written Premium approaching $15,000,000 in 2021.

This acquisition, paid for with a mixture of cash and XPT equity, provides several benefits to XPT. Firstly, S&H will expand XPT's geographic footprint across the US into New England.

This acquisition also brings additional expertise in product lines that intersect with XPT's current business and the addition of key markets, especially in the Lloyd's of London market.

XPT will provide S&H with the opportunity to expand its product offerings to existing clients, including Bars and Taverns and General Binding Authority business.

The acquisition of S&H is a continuation of XPT's strategy of acquiring specialist wholesale brokers and binding authorities that place hard to insure risks through wholesale distribution channels.

Fundraising

XPT has secured an additional $30,250,000 in debt financing from Madison Capital Funding LLC ("Madison"), over and above XPT's existing banking facilities with Madison of $37,400,000. XPT have also increased their existing revolving credit facility with Madison to $3,000,000, an increase of $1,000,000. This revolving credit facility is not being currently utilised by XPT.

Upon completing these new loan facilities, XPT drew down $15,250,000, with the remaining $15,000,000 being available via a draw down facility.

Madison, founded in 2001, is a market leader in providing middle market companies with debt solutions and is a leader in financing the insurance distribution sector. Madison is backed by the financial strength and stability of New York Life Insurance Company and has $10.6 billion of assets under management, exclusively investing alongside private equity sponsors and other investors.

This financing provides XPT with an opportunity to make further acquisitions and enter the next phase of its growth. The initial drawdown will be used to finance the S&H acquisition, alongside the payment of previously agreed successful earn out arrangements from other recently acquired businesses.

As part of this transaction, an independent valuation of XPT was undertaken which produces a 100% Equity valuation for XPT of $67,172,000 (or £49,464,000), inclusive of S&H.

Following the acquisition of S&H, B.P. Marsh will have a revised fully diluted shareholding (including warrants) of 28.6% in XPT. This would result in an implied valuation of our holding in XPT at £14,300,000, compared to our most recently announced valuation (as at 31 January 2021) of £12,812,000, an increase of £1,488,000. 

On the latest acquisition Tom Ruggieri, a founding partner at XPT stated:

"Our team has known Betty and Pat Sikora for years and they are a great fit to our collaborative partnership platform. The new partnership expands us into the Northeast and creates growth opportunities for our Binding and Program products."

"The Madison expansion allows us to continue to seek the right partners and to continue our strong hiring of new specialist producers".

Commenting on the recent activity, the Group's Chief Investment Officer and Member Representative at XPT, Daniel Topping, said:

"The additional fundraising with Madison is a tremendous milestone in XPT's ongoing development and growth. XPT is now on track to control Gross Written Premiums of approaching $380m in 2021, inclusive of the S&H acquisition. This is an outstanding achievement by the XPT team, and we look forward to further supporting their growth".

For further information:

 Notes to Editors: 

B.P. Marsh's current portfolio contains seventeen companies. More detailed descriptions of the portfolio can be found at www.bpmarsh.co.uk. 

Since formation over 30 years ago, the Company has assembled a management team with considerable experience both in the financial services sector and in managing private equity investments. Several of the directors have worked with each other in previous roles, and all have worked with each other for more than ten years. 

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