Direct group eyes growth after refinancing

The facilities, arranged by Lloyds TSB Corporate Markets Acquisition Finance, will enable Direct Group to capitalise on acquisition opportunities across the sector as well as fund its organic growth plans.

As part of the refinancing, Direct Group has also moved its banking relationship to Lloyds TSB Corporate Markets.

Last year, Yorkshire-based Direct Group, which was backed by private equity company LDC in 2007, completed its maiden acquisition of Millennium Insurance, a Midlands provider of general insurance solutions to the mortgage broker and IFA market.

In January this year, it took over the claims handling and administration business of MetLife’s UK protection arm as part of a five year deal, followed in April by the transfer of Nexus and Travel Protection Services (TPS) - the claims administration businesses within Longhawk Group (previously UK Underwriting).

The company’s offering now includes market-leading products and services across the general insurance market, including product development, sales and premium collection, policy administration, claims management, reporting and performance management.

Derek Coles, Chief Executive Officer of Direct Group, said: “Our clients are looking to partner with organisations that can support an increasingly broad range of requirements across their personal and commercial lines and across an increasingly complex set of distribution channels and platforms, while delivering consistently high service standards and real innovation.

“Since the original management buyout, our strategy has been to deepen our offering to the market, by enhancing and investing in our own service proposition and through the acquisition of complementary businesses. This is paying dividends, with the group reporting a strong pipeline and trading performance in the year to date.”

He added: “The years ahead present a unique opportunity to accelerate that strategy and we’ve been working closely with the team at LDC and their colleagues in Lloyds TSB Corporate Markets Acquisition Finance to put a financial structure in place to support that vision for growth.”

Ray Stenton, Director of LDC – which invested £21.3m in the business to support the management buyout - said: “There is a growing number of good quality assets coming onto the market, both independents and disposals from larger corporates, who need to build scale and depth in order to compete. Direct Group has the infrastructure, reputation, business model and strength of management to emerge as the market leader in fast-consolidating sector.”

Debt facilities were arranged by Mark Blower, Director of Lloyds TSB Corporate Markets acquisition finance.

Mark Blower said: “Through the combined support of the Lloyds Banking Group, we’re keen to ensure Derek and his team have the financial support to deliver their growth strategy.”

The refinancing follows several investments by LDC in the insurance support services market, including an £11million investment in the management buyout of Homeserve Emergency Services, a provider of home emergency fulfilment services, earlier this month (24 September).

In June, the private equity firm also backed the £19.95million management buyout of Ansa and Independent Inspections, both market leading providers of claims validation, management and fulfilment services on behalf of leading insurance companies.

Legal advisors to LDC and management were DLA Piper (Neal Shepherd).