Keoghs’ PE investor exits after insurance industry sale

Whittle: Too good an opportunity to miss

Leading insurance law firm Keoghs – which has enjoyed private equity investment for seven years – is to be bought by a private equity-backed professional services and technology business.

Keoghs will become Davies Group’s legal services arm to create what Davies described as an “insurance and risk management powerhouse”, allowing LDC, which holds a 22.5% stake in the alternative business structure dating back to 2012, to exit.

The details of the deal have not been disclosed at this stage, and Keoghs was not commenting yesterday beyond a press release.

Davies describes itself as an “operations management, consulting and digital solutions provider to organisations in highly regulated markets (including insurance, financial services, utilities, communications, and to regulatory bodies) and to global businesses”.

Its core services include claims solutions, insurance services, and consulting and technology, with 2,000 staff across six locations in the UK – including a head office in the City of London – as well as in Ireland, Bermuda, the US and Canada.

Its most recent accounts, for the 12 months to 30 June 2019, showed turnover up 49% to £115m – on the back of 17 acquisitions since the start of 2017 – and operating profit up 78% to £8.2m.

Davies’s investors are US middle-market private equity firm HGGC – which took a majority takes three years ago to kick-start the acquisition rush – Canadian institutional investment manager AIMCo, which invested a year ago, and Davies’s employees.

Keoghs, which has 1,700 staff, is based in Bolton and has nine other offices in the UK, where it deals with more than 100,000 claims a year.

In the year to 31 May 2019, the LLP recorded an 18% rise in turnover to £93m, with profit before members’ remuneration up 11% to £19.5m.

LDC – which is part of Lloyds Banking Group – says on its website that its support has enabled Keoghs “to increase investment in its people, processes and technology infrastructure while also enabling strategic acquisitions to add complementary services and scale to its operation”.

Chief executive John Whittle will continue to lead the business and will join Davies’s group executive committee.

Mr Whittle and the wider Keoghs management team will join Davies and become shareholders in the enlarged business. The deal is expected to close by the end of March.

Davies said the combined business would serve more than 500 insurance clients.

Dan Saulter, group chief executive of Davies said: “To compete and win in an increasingly integrated global insurance market, it is essential that we can offer our clients valuable solutions right across the insurance, claims and risk value chain.

“The addition of Keoghs to our growing Davies platform provides an exciting opportunity for us to take a new message to our clients, and to provide new opportunities for our teams across the world.”

Mr Whittle added: “The insurance market is undergoing exciting change with the widescale adoption of technology offering new innovative opportunities to provide services to the market on an industrial scale.

“The Keoghs strategy has always been to place our business, our clients and our people at the heart of this change, driving forwards to create the pre-eminent law firm in the insurance legal sector.

“The opportunity to join forces with Davies was too good an opportunity to miss to deliver on this, and we are delighted to be a part of an organisation that has a single, shared and unified vision for the future.”

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