Hyperion plans 'significant' acquisition soon, after Canadian cash boost

Hyperion plans soon to announce a “significant” acquisition, following the announcement of a $400m (£300m) investment by a Canadian fund.

“We will be making an announcement on an acquisition in the next couple of weeks,” Hyperion chief executive David Howden (pictured) told Insurance Times.

“It’s a significant one for us,” he said. “It’s overseas, but it’s a very important player in the markets we operate in.”

Howden was speaking after Hyperion announced that Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ) is to buy a minority stake in the insurance group, providing new equity as well as buying shares from existing shareholders. The cash will help fund future acquisitions, he said.

Hyperion also revealed that for the year to 30 September 2017 it reported preliminary unaudited revenue of £535m and EBITDA of £152m.

CDPQ will end up with a stake in the insurance group of between 25% and 30%, Hyperion’s chief financial officer Oliver Corbett told Insurance Times. CDPQ will join Hyperion alongside current investor General Atlantic, which currently holds a 35% stake. Hyperion management and employees will remain the largest shareholder group, the company said.

Hyperion also plans to launch a debt refinancing programme, extending maturity on some debt, raising additional primary debt, and extending its undrawn revolving credit facility.

Along with the CDPQ investment, this will provide more than $300m additional capital for future investments.

Corbett said the new debt will push Hyperion’s gearing back up slightly, but it will still be within the company’s conservative gearing guidelines.

“We have a conservative attitude to debt. We have 650 individual investors in the business and their collective risk appetite is relatively modest,” he said.

“Our gearing has gone down in the last 12 months. We have pretty explicit guidelines outside which we’re not prepared to operate.

“We look at the ratio of debt to annual profits. We’d get uncomfortable if that was north of 5 times,” he said.

“This time last year it was 4.7 times, it’s 3.9 times now, and the transaction we’re describing today gets us back into the mid 4s.

“The market will probably tolerate you at 6 and up, but that’s not where we are.”