Duke Street and Englefield sell out of EIG

UK mid-market private equity firms Duke Street Capital and Englefield Capital have realised their interest in UK motor insurer Equity Insurance Group in a £570m (US$1.12bn) sale to listed Australian insurer Insurance Australia Group.

Adam Barron, a partner at Englefield Capital, confirmed that the two private equity firms had acquired a joint stake in Equity Insurance Group in a £429m public-to-private in July 2005, the largest ever take-private involving a Lloyd’s underwriter at the time. Barron declined to comment on multiples or the return on investment generated from the sale.

Barron said that the original investment had been from Englefield Capital’s €700m Englefield Capital LLP fund. The vehicle, which closed in 2003, is now almost fully invested and the firm is following up with marketing for a second fund with a target of approximately €1bn. A first close of €920m was held in September and a second and final closing is expected shortly.

Duke Street Capital invested from its 2001 vintage €845m Duke Street Capital V fund, which is now almost fully invested. The firm is currently out marketing a sixth vehicle, the first since founder Ed Truell left in 2005 to set up the Pension Insurance Corporation, which was eventually launched in October of this year. No target has been disclosed for fund VI, but it is expected to have a similar size to its predecessor.

Englefield Capital’s previous investments in financial products includes TBIH, an East European motor insurance firm acquired in January 2005, and Canopius, a December 2003 purchase formerly known as Trenwick Managing Agents.

Operating through its Equity Insurance Brokers and Equity Red Star divisions, Equity Insurance Group is the UK’s fifth largest motor underwriter, the eight largest motor insurance broker and the largest motorcycle insurer. IAG funded the transaction through a A$600m (US$472m) share placement, a share purchase plan, internal funds and subordinated debt and loan notes.

Insurance Australia Group, listed on the Australian Stock Exchange, previously acquired Hastings Insurance Services, the fifth largest motor insurance broker in the UK, and Advantage Insurance Company, a direct personal lines insurer specialising in the UK motor insurance market. IAG paid A$350m (US$275m) for the two businesses in September this year.