Sovereign to sell Arachas for €250m

The deal will value the company at more than €250m and 13x operating earnings, according to a report by the Times. Sovereign has realised a 5.5x money return and an estimated IRR of 76%.

Arachas is a Sovereign Capital IV portfolio company, which closed on £395m in August 2014. This will be the second exit for the fund, following the sale of Zendo in 2018. 

Since Sovereign's initial investment, the company has made four acquisitions: Capital Cover Group and Kidd Insurances in 2017, Covercentre in 2018, and Murray & Spelman in 2019.

Previous funding
Sovereign backed the management buyout of Arachas in 2017, acquiring a controlling stake in the company. Arachas was aiming to reap €25m from the sale, according to a report by the Irish Independent in November 2016. Rothschild's Five Arrows Direct Lending provided a debt package to support the deal.

Company
Cork-based Arachas is an insurance brokerage and financial planning consultancy for businesses, and was founded in 2003. The company employs 250 staff across its offices in Dublin, Cork, Kildare and Waterford.

People
Sovereign Capital – Trevor Stokes (investment director); Alex Hay (partner).
Arachas Corporate Brokers – Donal Cronin (CEO).

Advisers
Vendor - Keefe, Bruyette & Woods, Simon Barrass, James Sutton (corporate finance); Eversheds, Gavin O’Flaherty, Maria O’Brien (legal); AIB Corporate Finance, Alan Mahon, Shane Foyle (corporate finance); Deloitte, Ian Sparshott, Clodagh Mullins (financial due diligence); LEK, Ashish Khanna, Peter Ward (commercial due diligence).

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