Speculation intensifies that Giles plans to swoop as part of ambitious growth plans.
Speculation is mounting that ambitious consolidator Giles Insurance Brokers is poised to make an audacious bid for rival consolidator Oval.
Senior market sources said that Giles Insurance was eyeing the broking and financial services group.
“It would be an all-out buy [of Oval],” said one source. Giles is looking to grow to £1bn in annual premiums after selling a majority stake to a private equity firm earlier this year.
The private equity deal with Charterhouse gave Giles an acquisition war chest of £500m. But any deal for Oval is likely to command a price tag in excess of £200m.
Chris Giles, the company’s chief executive has previously suggested that a merger with another major consolidator would be an ideal move.
“It’s about time some of the consolidators came together. My appeal is to come together before Towergate and Venture Preference [AXA’s broking arm] disappear over the horizon,” Giles said earlier this year as he laid out his ambitious growth plans.
Meanwhile, Oval’s future plans remain unclear. The broker has stated that it is considering a range of options for refinancing that could include a public listing.
It is not clear whether Oval’s shareholders, which include private equity firm Caledonia, would be willing to accept an offer by Giles.
Oval put its acquisition drive on hold over the summer blaming adverse market conditions, although it has been reported that it wishes to recommence talks with targets once conditions improve. It is also understood that consolidators are being forced to heavilly scrutinise their refinancing options as interest on lending has nearly doubled in the last year.
Insurance Times reported earlier this year that Oval had been talking to insurers, including as Allianz, with a view to selling a stake in the business and widening its equity base.
Oval published unaudited group financial results for the year ending 31 May 2008, showing turnover had increased by 41% from £60m to £85m with group revenues in excess of £100m on an annualised basis. Both Giles and Oval were unavailable to comment.
