Steadfast Group's acquisition of Whitbread Insurance Group for $95 million

Industry Expert, Whitbread sold for $95M

Robert Kelly, CEO of the Steadfast Group confirmed that the company had acquired the Whitbread Insurance Group for $95 million, and he said it doesn't often look beyond businesses it already has relationships with.

"We play in our own sandpit with these particular acquisitions, we don't go out and work too much," he said.

"But that doesn't mean we won't do an acquisition that's not contained within our circle of strategic partners."

The $2.2 billion ASX-listed company has made about 100 acquisitions since it floated in 2013. It runs its own mergers and acquisitions team for both finance and legal operations.

"We do all our own due diligence in terms of evaluating businesses. Candidly, we're expert in this area and we think we know what we're looking for better than having a third party tell us ... and we've had success."

When it first floated in 2013 its shares were $1.15, but they last traded at $2.93 before the company went into a trading halt on Friday.

Steadfast launched an underwritten institutional placement of $100 million to fund the acquisition, with J.P. Morgan Australia and Macquarie Capital acting as joint lead managers.

Positive reaction

Mr Kelly said reaction from institutional investors was positive.

"A number of hedge funds have been very interested, as have our long-term holders," he said.

Family-run Whitbread is a "long-standing member" of Steadfast's broker's network.

"This investment is really within our normal modus operandi. It's core to what we do and they [investors] understand the quality  of the businesses we buy and why it strategically and culturally fits," said Steadfast chief financial officer Stephen Humphrys.

Whitbread has 80 staff and two business units, Whitbread Insurance Brokers, a general insurance broker and Axis Underwriting Services, an underwriting agency specialising in niche areas of property and liability.

It has a combined $111 million in gross written premium for the full year 2017.

Mr Kelly said the acquisition of Whitbread would be earnings accretive.

"Underlying earnings per share accretion is expected to be 3 per cent in full year 2018 on an annualised basis, assuming that the acquisition is fully funded by equity," he said.

In its full year results, Steadfast reported an underlying net profit after tax of $66 million, up 9.8 per cent on the previous year.

Share purchase plan

In addition to the institutional equity placement, Steadfast also announced a non-underwritten share purchase plan to retail shareholders in Australia and New Zealand for up to $25 million to "fund future growth".

The application for new shares under the SPP will be capped at a maximum of $15,000 per shareholder, with shares issued under the SPP ranking equally with existing shares of Steadfast.

Also on Monday ASX-listed insurance broker AUB Group said it has acquired New Zealand broker Lowe Schollum & Jones Ltd via its equity partner BrokerWeb Risk Services.

"The market continues to be active, and alongside our strong organic growth, we are elated that we are building further momentum by adding new partners to our network in high-growth regions across Australia and New Zealand," said AUB group CEO Mark Searles.

"This acquisition highlights the long signalled and continued expansion of AUB Group in New Zealand. We are excited for our partner business, BWRS, and its national expansion. While backed by the professionalism and scale of AUB Group and BWRS, LSJ will remain locally run, by local professionals, for local businesses and clients."

LSJ has more than 1800 clients.

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