B.P. Marsh & Partners Plc the specialist investor in early stage financial services businesses, is pleased to announce that XPT Group LLC (“XPT”), the U.S. based specialty lines insurance distribution company, has successfully completed a fund-raising exercise and complementary acquisition.
Fundraising
XPT has secured $40million in aggregate financing from Madison Capital Funding LLC (“Madison”).
Madison, founded in 2001, is a market leader in providing middle market companies with debt solutions. Since inception Madison has invested $34.4billion in 1,193 transactions with 305 different private equity sponsors. Madison is a leader in financing the insurance distribution segment.
As part of the transaction, Madison will take an equity interest in the business which values XPT at an enterprise valuation of circa $54m.
The financing provides XPT with an opportunity to make further acquisitions and enter the next phase of its growth. Upon completion with Madison, XPT will draw down $18m. This draw down will be to finance the acquisition detailed below and to repay an existing debt facility.
A further $22m finance facility is in place to support growth.
Acquisition
Simultaneously to the completion of the fundraising, XPT have acquired 100% of Sierra Specialty Insurance Services Inc. (“Sierra”). Sierra is an MGA and wholesale broker based in Fresno, California, and specialises in the provision of insurance to independent retail agents.
Sierra is led by President, Kathy Schroeder together with COO, Mark Schroeder. Both Mark and Kathy Schroeder have many decades of experience in underwriting, broking and management. Kathy has also served on the American Association of Managing General Agents Board, one of the two predecessors to Wholesale Specialty Insurance Association (WSIA). Both Kathy and Mark Schroeder will remain at Sierra post acquisition.
Following the investment by Madison in XPT and the acquisition of Sierra by XPT, B. P. Marsh will have a revised shareholding of 32.2% in XPT.
XPT continues to explore additional M&A opportunities in the U.S. that complement and enhance XPT’s product and distribution offering.
XPT’s Chief Executive Officer Thomas Ruggieri has stated that “XPT is fortunate to have quickly assembled a Partnership nucleus of expert specialists in Specialty Distribution financially backed by the two most experienced financers supporting Insurance Distribution in BP Marsh and Madison Capital Funding. We look forward to continuing our industry leading organic growth by supporting our partners with new product, resources and customer service to attract the brightest client focused producers to our partnership.” He also noted “Kathy and Mark’s leadership in the industry and in central California will greatly enhance our partnership. Sierra Specialty reinforces XPT’s collaboration as they will partner in our existing product segments in general authority underwriting, transportation and hospitality, while moving us into agri-business.
Commenting on the recent activity, the Group’s Chief Investment Officer and Nominee Director on XPT, Daniel Topping, said “The fundraising with Madison is a tremendous milestone in XPT’s development. Since XPT’s first investment in November 2017, XPT has grown to Gross Written Premium approaching $200m, inclusive of the Sierra acquisition. This is an outstanding achievement by the XPT team and we look forward to further supporting their growth.”
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