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Giles: acquisition strategy continues with Paul Murphy Insurance Services

27th June 2008
By Andrew Haslip

Consolidation in the broker channel persists with Giles' purchase of Paul Murphy Insurance Services.

Not all major consolidators have halted their acquisition, as evidenced by Giles' acquisition of Paul Murphy Insurance Services. The acquisition is the latest move in the company's plan to reach GBP1 billion in turnover. Due to Charthouse Capital Partners providing the necessary capital, it is likely that Giles will be able to continue its acquisitions, bucking the current market trend.

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Giles Insurance Brokers announced its acquisition of Ton Pentre-based broker Paul Murphy Insurance Services on June 27. The broker, established in 1991, is only Giles' second broker purchase in Wales and will help the company to extend its geographical presence in the region. Giles has been extremely active since the start of 2008: Paul Murphy Insurance marks its 10th acquisition this year. Like previous acquisitions, this regional broker offers a range of insurance, both personal and commercial, though with a larger commercial weighting.

The acquisition of Paul Murphy Insurance is another part of Giles' plan to become a broker with GBP1 billion in turnover. The consolidator's growth aspirations were boosted in March 2008 when Charthouse Capital Partners took a stake in the company and, along with the Bank of Scotland, agreed to provide GBP500 million to fund the consolidator's acquisition activity.

In contrast, other major consolidators have announced plans in recent weeks to scale back acquisitions activity. In June 2008, Oval announced that it was putting future acquisitions on hold, while Towergate announced that it would scale back its activity. Both consolidators have acquisition war chests which are considerably smaller than Giles': Towergate's acquisition fund amounts to just GBP100 million, only half of which it is willing to spend. External sources of funds, which are exposed to the pressures arising from the credit crunch, would be a key element of any large purchases or series of purchases.

It is expected that Giles will continue to buy small to medium sized brokers throughout the rest of the year as it spends its GBP500 million acquisition fund. However, as other consolidators are not similarly endowed, Datamonitor expects that acquisition activity will be lighter. This is good news for Giles: fewer consolidators pursuing deals should mean that broker prices are less likely to become inflated by a bidding war.
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