By Amy-Jo Crowley and Pablo Mayo Cerqueiro
LONDON (Reuters) – European buyout houses Montagu Private Equity and Astorg Partners are preparing to put the “for sale” sign on their UK insurance software investments, hoping to win over insurers and fellow private equity funds with their technology .
Montagu is investigating a sale of Open GI, which provides software for insurance brokers to run their businesses, in a deal likely to be worth several hundred million pounds, five sources familiar with the matter told Reuters.
The sponsor has been working with advisors on a strategic review of the company in preparation for a formal sale in the second quarter of the year, sources said.
London-based rival Acturis, backed by Astorg, is also preparing for a sale, which could formally start in the second half of 2023, three of the sources said.
Montagu declined to comment. Acturis, Astorg and Open GI did not respond to requests for comment.
Private equity funds invested in insurance IT providers long before a new breed of so-called “InsurTech” companies emerged in the second half of the last decade with a mission to supplant traditional insurers.
In January, Vista Equity Partners agreed a $2.6 billion deal to delist US company Duck Creek Technologies as a sign of investor interest in the sector.
Some, like Montagu, are now trying to monetize their investments after revamping their portfolio companies’ technology stacks.
Montagu backed a management buyout of UK-based Open GI in 2014, having previously owned the company and sold it to insurance broker Towergate in 2007.
The latter tried to sell the company in 2018 and has since aimed to transform it into a software-as-a-service (SaaS) platform, which could attract other private equity funds with existing investments in the insurance industry, it said. sources.
For its part, Astorg purchased a minority stake in employee-owned Acturis in 2019 for an undisclosed sum.
Open GI could be worth up to 12 times its projected core revenue of more than 30 million pounds ($35.96 million) expected for 2023, two sources said.
Meanwhile, Acturis could trade at a premium thanks to its higher earnings and higher growth profile, they said.
According to Reuters calculations, Open GI generated earnings before interest, tax depreciation and amortization (EBITDA) of approximately £25 million for the year ended May 31, 2022, slightly lower than the prior financial year after accounting for extraordinary charges.
Meanwhile, Acturis generated EBITDA of more than £60 million in the year to September 30, 2021, according to Reuters calculations based on the latest available figures.
Revenue increased from £102.4 million last year to £111.9 million as the company added new brokers and insurers to its namesake SaaS platform.
($1 = 0.8344 pounds)
(Reporting by Pablo Mayo Cerqueiro and Amy-Jo Crowley; editing by Susan Fenton)
