By Ryan Hewlett

April 23 - (The Insurer) - PIB Group and backers Apax Partners and Carlyle Group have refocused their search for a new owner for the UK and international broker consolidator on trade buyers after a muted reception from private equity and institutional investors.

• PIB valuation initially marketed at 3.75 billion pounds to 4 billion pounds; 2024 EBITDA = around 250 million pounds

• Evercore-led process launched last year but PE interest muted

• Apax acquired PIB Group from Carlyle Group in 2021

The decision to target trade bidders appears to mark a U-turn in strategy for PIB and comes after bids from private equity failed to reach Apax’s valuation expectations, buy-side banking sources close to the talks told The Insurer on the condition of anonymity.

Potential trade bidders could include the international arm of U.S. broker Arthur J Gallagher and Brown & Brown (Europe), one source said, noting that Howden could also be in the frame following the collapse of its talks to acquire Risk Strategies in North America.

Apax was first reported to be weighing up strategic options for PIB in March 2024. The Evercore-led process focused almost exclusively on private equity bidders, which sources said was also the preference among PIB senior management.

But a deal failed to emerge with potential private equity buyers concerned about PIB’s existing leverage of around 5.5x EBITDA with debt maturing in 2030, the sources said, resulting in valuations that fell short of Apax’s expectations.

The renewed process is taking place while private equity investors are displaying a cooler sentiment towards broking businesses. The sources highlighted higher borrowing costs, tougher debt markets and the already high levels of UK and U.S. broker consolidation as factors making it harder for private equity to buy and sell businesses for a profit.

In contrast, larger trade buyers – which typically benefit from greater M&A synergy cost savings and lower costs of capital – have shown an increased appetite to contemplate large-scale acquisitions in recent times.

Notable transactions include Gallagher’s $1.2 billion swoop for D&O specialist retail broker Woodruff Sawyer, a deal which came on the heels of its $13.5 billion acquisition of AssuredPartners in December. Other recent deals include Marsh’s September 2024 acquisition of McGriff from TIH for $7.75 billion and Aon’s $13 billion deal for NFP, which closed in April 2024.

The global trade war kicked off by U.S. President Donald Trump and the ensuing market turmoil was another factor which soured interest in the expansive but debt-laden firm, the sources said.

The sale process for PIB previously secured interest from private equity investors including Cinven and Hellman & Friedman. One well-placed banking source indicated that PIB and Apax may look to replace Evercore with an alternative adviser.

PIB and Apax declined to comment.

Apax acquired PIB Group from Carlyle, which remains a minority owner, in 2021.

Since then PIB has acquired a number of entities across Europe. Most recently this included the acquisition of Gleeson Insurance, which followed deals for two Irish brokerage firms in February 2023: Landmark Insurance and Halligan Insurance.

In the first half of its 2024 financial year to the end of October, PIB Group produced adjusted EBITDA of 74 million pounds, up 9% from the same period in 2023. The company’s revenue grew 6% to 234 million pounds across the same period.