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Ex GoshawK chief in buy-out attempt

Chris Fagan, the former chief executive of insurer GoshawK, is behind an attempt from a Japanese private equity house to take the UK listed company private.

Fagan was ousted from GoshawK last year following the collapse of its Lloyd's Syndicate 102 last year because of heavy underwriting losses. However, the company continues to trade through its Bermudian reinsurer Rosemont Re formed in 2002.

On 30 September, Nikko Principal Investments - a subsidiary of Japanese finance house Nikko Cordial Group - told the London Stock Exchange that it had made an approach for the company. But hours later, GoshawK said that it had halted the talks - ending a 10 percent climb in the company's share price.

A spokeswoman for Nikko refused to comment on whether Fagan was involved in the bid process but confirmed to The Insurance Insider that the buy-out firm was keen to continue with talks. Nikko now has until the 23 November to either table a firm bid or be prevented from doing so for six months - the outcome of a ruling by the UK Takeover Panel on the 12 October following an application by GoshawK’s advisors.

But there are suggestions that emnity between GoshawK’s executive chairman Paul Spencer - the former R&SA UK chief executive who effectively replaced Fagan - and his predecessor, may have hampered negotiations.

Certainly, Nikko’s 13 October statement to the London Stock Exchange hinted at frustrations. After welcoming the Panel’s decision, the buy-out firm continued: “It has always been Nikko's intention to work constructively with the Goshawk Board to enable an offer to be made that would be acceptable to Goshawk shareholders.

The buy-out firm continued: “Nikko is very serious in its efforts to make an offer for Goshawk. However, this will be possible only if the Goshawk Board enters into constructive discussions with Nikko and its advisers and provides timely access to the additional information required by Nikko to complete its due diligence exercise.”

The buy-out concluded by saying it will seek to meet with “certain Goshawk shareholders to ascertain their support for Nikko's approach”.

GoshawK currently trades at 47p - a significant discount to the 57p net tangible assets per share.

It is unclear what Nikko's intentions are although it is presumed that Fagan would be parachuted back into the company in some capacity. Although Fagan received criticism for the decline of GoshawK, he only stepped up as chief executive in 2002 - at a time when many of GoshawK's curious underwriting decisions - including viatical insurance and legal expenses cover for defunct claims farmer The Accident Group - had already been made under the watch of company founder Andrew Gammell.

He also implemented the decision to form Rosemont Re - the only surviving part of the company.

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