Goldman Sachs frontrunner for £360mn+ Clear as process nears end
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Goldman Sachs frontrunner for £360mn+ Clear as process nears end

Goldman Sachs Tower in Exchange Place Jersey City NJ

Goldman Sachs’ private equity arm is the favourite in the Clear Group sales process after putting in a high-watermark bid that suggests private brokers’ valuations are continuing to defy growing macroeconomic pressures, this publication can reveal.

Insurance Insider reported in April that UK broker consolidator Clear Group, currently owned by ECI, had appointed Macquarie to run a 2022 sale process.

Sources noted that although the pair have not yet entered formal exclusivity, Goldman Sachs is currently the top bidder, offering a deal multiple in excess of 18x on a marketing Ebitda of around £20mn ($24.4mn).

This would point to a consideration north of £360mn. It is understood that the marketing Ebitda is more heavily adjusted than is strictly usual in such deals, with a number of synergies and scheduled acquisitions factored into the price.

As such, some would judge the true multiple to be significantly beyond 18x, potentially explaining some earlier chatter that a deal would be done at effectively 20x.

Clear Group’s CEO is Mike Edgeley, who took up the role in January 2021. The group’s founder Howard Lickens is now executive chairman, responsible for overall strategy and direction.

Market watchers have been waiting for the impact of tighter debt markets, easing rate rises and a slowdown in economic growth to put downward pressure on broker sale multiples. However, TigerRisk and Clear have both defied this picture, with scarcity value trumping these other issues.

Goldman Sachs’s last major UK retail broking investment was Aston Lark, which it bought from Bowmark Capital in 2019 for around £300mn, or a multiple of around 12x Ebitda.

It sold the business to Howden for around £1.1bn in a deal struck last year, for a multiple of 17x-18x, in a transaction that gave the PE fund a blowout return.

Sources said other late-stage participants in the process were private equity firm Lightyear Capital, Aon and Howden.

It was suggested that other bidders may have a final chance to respond to Goldman, but both Aon and Howden are believed to have fully downed tools.

Howden’s recent acquisition trail has been well documented by this publication. As well as Aston Lark, in 2020 it bought A-Plan from Hg for around £700mn.

Lightyear Capital has had less presence in UK insurance broking investment.

Its last major transaction was the sale of Ed Broking, formerly Cooper Gay, to BGC Partners, agreed in autumn 2018. Ed, later known as Corant, along with stablemates Piiq and Besso, was bought by Ardonagh for $500mn in 2021.

ECI bought Clear Group in a deal struck in July 2018. The private equity firm saw off competition from fellow bidder Bowmark Capital in negotiations that centred on an offer of 12x-13x Ebitda for a stake, translating to a price of £40mn-£50mn for the whole equity.

It has since grown significantly through a series of acquisitions, notably its purchase of Brokerbility Holdings in 2020.

That transaction included the company’s subsidiaries BHIB and Churchill Insurance Consultants, the Brokerbility Network, the software company Brokertech and IT platform Brokerbility Information Gateway.

It increased Clear Group’s handled premium by around 40% to £200mn.

Aon and Howden declined to comment. Clear Group, Goldman Sachs and Lightyear Capital did not respond to a request for comment.

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