Calera Capital in talks to sell RFIB

Independent broker RFIB is in sale talks with several parties as its private equity backer Calera Capital looks to exit its majority investment, The Insurance Insider can reveal. 

Sources told this publication that Calera approached a number of parties in January, inviting them to sign non-disclosure agreements and enter sales talks. 

The 2015 investment has been challenging for the San Francisco-based private equity house, with the business moving into the red and having its ambitions to expand through M&A frustrated. 

It is understood that Calera is using its own in-house M&A function and has not retained an investment bank. 

Firms linked with potential bids for RFIB include expansive US financial services firm BGC Partners and broker Brown & Brown.  

However, this week’s revelation that Steve McGill is returning to the market with a start-up broker has also raised intriguing speculation that he could move on RFIB if he opts to pursue a starter acquisition. 

As recently as December, RFIB’s executive chairman Dennis Mahoney had told this publication that RFIB was not for sale. 

“We intend to remain independent,” Mahoney said, adding that Calera remained a committed owner. 

The San Francisco-based private equity house bought RFIB in the summer of 2015. At the time, Calera agreed to buy the broker for £53mn ($67mn), or roughly 10x forward Ebitda, but the consideration was subsequently negotiated down as earnings failed to materialise at expected levels.   

The past three years have not been plain sailing for RFIB. It is understood that, after Calera invested, a number of staff saw their remuneration cut by a third.  

The 2017 annual accounts for RFIB Holdings, the London-based entity that owns RFIB Group, show a loss of £26,000 ($34,189), compared to a profit of £5,000 in 2016.   

In separate accounts, RFIB Group reported a 2017 loss of £1.5m, an improvement on the prior year when the loss was £2.1mn.  

RFIB Holdings’ ultimate parent is Risk Transfer Group, which is domiciled in Jersey. Its accounts are not available. 

BGC demonstrated its growth ambitions with the acquisition of Ed in February for $90mn-$100mn. This followed its $86.6mn purchase of Besso two years earlier. 

Brown & Brown, a major presence in the US retail market, is underweight in London, with its operation Decus having revenue of only $12mn. If it had a major wholesaling presence in the British capital, it would likely be able to boost profits by reducing leakage of business to third-party wholesalers. 

RFIB, Brown & Brown and BGC did not respond to requests for comment.  

Calera Capital declined to comment.