Towergate kicks off 2013 acquisitions

Towergate has planted its flag in the ground regarding its growth intentions for 2013, with its announcement today of three acquisitions. With many of the UK’s top broking outfits gearing up for expansion over the coming year, consolidation looks set to dominate the map.

Towergate’s traditional growth area has been in the small to medium-sized business arena, but as the market refuses to be buoyed up despite increased opportunities for placing commercial business online, the broker looks set for another acquisition boom.

Today it announced its first three acquisitions for the year, including Leeds-based brokers Speake Medley and Woodside Insurance Services. Its subsidiary Cullum Capital Ventures (CCV) bought an additional 45% stake in Ipswich broker Morgan Law, taking its total ownerhip to 85%.

Chief executive Mark Hodges is on a mission to grow Towergate’s earnings to fund further growth and maintain interest payments, and recently described the number of potential deals in the offing as “very healthy”.

Last year the company bought 26 brokers, and it has been suggested that it could surpass this figure in 2013.

Towergate has maintained a healthy appetite for targeting niche brokers with schemes for unusual risks. This is a market that usually has solid demand and also benefits from less competition.

Paymentshield sale on the cards

At the same time, the broker looks set to cash in on its Paymentshield division, according to the Sunday Times.

The paper said that Towergate had hired investment bank Morgan Stanley to advise it on the sale of its Paymentshield division, in a move that could bring in £400m - roughly eight times the division’s 2011 earnings before interest, taxes, depreciation and amortisation.

There had been rumours over the past six months that Towergate was looking to sell Paymentshield, which provides mortgage payment protection insurance, and private equity buyers appear to be first in the queue to snap up the company.