The details behind the £1.2bn ($1.5bn) takeover of UK-based insurance giant esure have come to light. Four global companies were involved in the buyout.
While esure is likely to keep its main job base in Glasgow for now, the deal should give the insurance company a huge boost in its quest to reach more worldwide markets. The international pedigree that comes with the takeover will help with this aim.
Two of the companies that participated in the buyout are from Switzerland, and one each is from the US and Australia. Blue Bidco Limited, a subsidiary of the better-known Bain Capital Funds entity, brokered this wide-reaching capital investment program.
One company headquartered in Switzerland is LGT Capital Partners, which also has a worldwide base with offices in cities such as New York, Tokyo, Beijing, Sydney and Paris. As a whole, the LGT Group manages an asset list of more than $200bn, but the Capital Partners side focuses on more of an alternative investment strategy and currently has around $60bn in its portfolio. At present, LGT Capital Partners works with 500 institutional investor clients, and deals such as the one with esure are set to broaden its appeal so that it can work in other markets and grow its client base.
The other Swiss-registered company is HarbourVest, which specializes in private asset management. It is involved in the esure deal directly rather than branching out through a subsidiary. HarbourVest manages $50bn in assets, a bit less than LGT Capital Partners.
The company operates globally in primary funding, secondary funding and direct co-funding. HarbourVest has allocated $34bn of its assets to new funds, around $19bn to secondary funding processes and $8bn directly into some companies. HarbourVest has bases in several continents, including North America, Asia and Europe.
Lexington Partners is the US-based company involved in the esure deal. It mainly positions itself as an independent manager of co-investment and secondary investment mechanisms. Lexington Partners has over $38bn in committed capital, which also includes co-investment drives. The company operates in a similar arena as the markets that its fellow funders move in, so it appears that its investment will push esure toward a more general market.
The Future Fund Board of Guardians is the Australian company that participated in the esure buyout. It is a subsidiary of the Future Fund Management Agency, which was originally set up by the Australian government to facilitate more foreign acquisitions and investments and shore up the economy over the long term.
Although heavy exposure to foreign currencies for emerging markets can be unwise, as Turkey found out to its detriment earlier this year, there is also a risk involved in avoiding this completely, as an emerging currency may gain little strength against rival currencies.
The Future Fund, Australia’s sovereign wealth fund, appears to be performing above expectations, delivering returns of 8.5% over the last decade for a value of A$141bn ($100bn). The original forecasts were for a 6.7% benchmark.