Sovereign backs MBO of Arachas

Under its new ownership model, the company will continue to be led by CEO Donal Cronin and will undertake an acquisitive growth strategy.

Sovereign is currently investing from its fourth buyout fund, which closed on its £395m hard-cap in August 2014 and makes equity investments of up to £50m. According to a report by the Irish Independent in November last year, Arachas was aiming to reap €25m from its sale.

Sovereign has a track record of investing in the insurance space, having acquired Dudley-based Kindertons in October 2013 and London-based Cordium (at the time known as IMS Consulting Group) in November 2010. The GP sold Cordium in a secondary buyout to European Capital in December 2014, reaping 4x money.

The Arachas acquisition is subject to approval from the Central Bank of Ireland.

Debt
Rothschild's Five Arrows Direct Lending is providing a debt package to support the deal.

Company
Headquartered in Cork and founded in 2003, Arachas is an insurance brokerage and financial planning consultancy for businesses. It has a headcount of 130, including its additional operations in Dublin and Waterford.

According to the Irish Independent, the business generated a turnover of €15.1m in 2015 with pre-tax profits of €1.05m.

People
Sovereign Capital – Neil Cox (partner); Sunil Jain (investment director); Trevor Stokes (investment manager); Alex Hammick (investment executive).
Arachas Corporate Brokers – Donal Cronin (CEO).

Advisers
Equity – Deloitte, Anya Cummins, John Gregson, Martin Reilly, Sean Smith (corporate finance, debt advisory, tax, financial due diligence, regulatory due diligence); Eversheds, Gavin O’Flaherty, Catherine Eley, Richard Davies (legal); LEK, Ashish Khanna (commercial due diligence); Intuitus, Iain Mackay, Garry Tough (IT due diligence); Vista, Peter Warburton (insurance due diligence).

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• Topics
• Buyouts
• UK / Ireland
• Financials
• Ireland
• Sovereign Capital