CBPE Capital invests in Direct Commercial Group

Direct Commercial Group is made up of Chelmsford-based commercial motor underwriters Direct Commercial and Gibraltar-based insurance carrier Carraig Insurance.

The company's CEO and founder, Phil Cunningham, and the management team reinvested; however, financials were not disclosed. Cunningham remains the majority shareholder, according to a press release.

CBPE invested via CBPE Capital Fund IX, which closed on its hard-cap of EUR 459m. The vehicle seeks to make around 14 investments with an average ticket size of EUR 30m-35m.

A CBPE spokesperson told Unquote that this was an off-market deal and they have a minority interest in the company. They added that they will be appointing an experienced private equity chairperson with an insurance industry background.

CBPE closed its 10th fund, CBPE Capital Fund X, in November 2020 on its hard-cap of GBP 561m. The fund was registered in December 2019 and held the first close in March 2020 on GBP 465m. The vehicle will most likely target UK-based companies with enterprise values of GBP 25m-150m and an average ticket size of GBP 30m-35m. Much like its predecessor fund, it will make both growth-capital and primary-buyout investments, according to Unquote Data. The vehicle's first investment was made in March 2021 in UK-based software company Mindera.

According to a press release, the Mindera deal follows a history of investments that the GP has made in the financial services sector, including Jersey-based administrator JTC Group, which it backed in June 2012, and UK-based corporate pensions consultancy Xafinity, backed in November 2012 – both companies successfully listed on the London Stock Exchange. The GP's current portfolio companies from CBPE Capital Fund IX include financial advisory consultancy Perspective Financial Group.

Company
Direct Commercial was founded in 2002 and is a commercial motor insurance underwriter. The company also provides policy administration and in-house claims handling. It is headquartered in Chelmsford and has offices in London, employing 145 people. According to its website, the company writes GBP 120m in gross premium in the UK & Ireland.

The group includes Gibraltar-based insurance carrier Carraig, which provides insurance capacity to Direct Commercial alongside Munich Re Group.

CBPE told Unquote that the company's 2021 turnover stood at GBP 121m and it posted an operating profit of GBP 11m. 

People
DCL Group – Phil Cunningham (CEO and founder).
CBPE Capital – Mathew Hutchinson, Richard Thompson (partners).

Advisers
DCL Group – Keefe Bruyette & Woods (corporate finance); HFW (legal).
CBPE Capital – Macquarie Capital (corporate finance); Reed Smith (legal); PwC (financial & commercial due diligence).

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• Close Brothers Private Equity (CBPE)
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