Ardonagh taps Macquarie Capital, Stanton Road Partners for $2.26bn PSC Insurance acquisition

Ardonagh Group is understood to have tapped Macquarie Capital and Stanton Road Partners for its $2.26bn deal to buy PSC Insurance Group.

The Ardonagh Group is understood to have tapped Macquarie Capital and Stanton Road Partners for its $2.26bn deal to buy PSC Insurance Group.

PSC worked with Goldman Sachs, which was understood to have been in talks with parties around the market for some time to find a buyer of the business as part of what was known as “Project Rosedale”.

The sale enabled major shareholders, including founder and chairman Paul Dwyer, to sell down.

Goldman Sachs is understood to have been soliciting offers from suitors since late last year and the process culminated in a sale to Ardonagh announced on Wednesday night.

The appeal of PSC Insurance to Ardonagh was that it operated in the Australian market, which was considered an attractive market for the global insurance broking industry.

Local industry heavyweights AUB Group and Steadfast, as well as PSC Insurance, have been consolidating the Australian industry over time.

Ardonagh operates in Australia through its Brisbane-based Envest business, which it agreed to buy in November 2022 for $800m.

Ardonagh’s other Australian assets are Resilium Insurance Broking and Epsilon Underwriting, which have been integrated to sit under the Envest umbrella.

The PSC Insurance purchase catapults Ardonagh into the position of being one of the top three participants in the Australian market, providing not only scale but also synergies with its existing business.

The largest operator is Steadfast, which is among the parties that took a look at PSC Insurance when it was offered up for sale.

DataRoom understands that the company had been holding out for a price over $2bn and the $2.26bn proposal, equating to $6.19 a share, was a 27.6 per cent premium to its closing share price on March 12.

Shares on Thursday were up 5 per cent to $6.02 just before the market close.

PSI Insurance issued a statement after the market had closed on Wednesday saying it had entered a scheme of arrangement-structured buyout deal and said that its board would recommend the offer, with a number of key stakeholders vending their shares into the Ardonagh business.

The offer values the business at $2.26bn or $2.4bn including debt.

Elsewhere, a clearer picture has emerged as to the reasoning for Sidara to offload its 19 per cent interest in Worley for $1.4bn last week.

It appears that the Middle Eastern group has used the proceeds to bid for Worley’s global rival Wood Group.

The UK-based Wood Group rejected its $US1.78bn offer lobbed on April 30, equating to 205 pence per Wood share because it undervalued the company, as reported in the Wall Street Journal.

The offer made by Sidara was disclosed by Wood Group on May 8.

Sidara said at the time it was selling out of Worley because the longer-term partnership it had hoped for, particularly with respect to work in the Middle East region, had not eventuated.

Worley rejected its request for a global co-operation agreement because of the lack of synergies.

The Middle Eastern group bought into Worley with an initial 13.45 per cent stake in February 2017 after first making its approach as part of an attempt to buy the business and amass 19.9 per cent, but the $11.80 per share bid in November was rejected.