Towergate, Britain’s largest private insurance company, is mulling a sale, which could lead to a huge windfall for its founder and chairman Peter Cullum. If a sale does happen, Peter will be on course for an overwhelming £2 billion profit over his investment.
It is learnt that Towergate has been approached by a number of private equity groups for a proposed takeover. The companies that are in line for a potential buyout of Towergate include Blackstone, Charterhouse, TA Associates and Candover. They have valued the company at £3 billion in its entirety.
Towergate is considering ‘all offers - for majority or minority stakes,’ according to Andy Homer, non executive director of the company. Towergate has instructed its adviser Lexicon Partners to arrange for any potential sale.
Peter Cullum has a 65 % stake in the company. He has insisted that he will not sell unless the offer price reaches at least £3 billion. This despite a £1 billion valuation which was made last year following a deal with two hedge funds as a part of refinancing.
Based in Maidstone, Kent, Towergate was formed in 2005 by the merger of two insurance businesses initiated by Peter Cullum. Since then, the company has grown on to become Europe’s largest in dependent insurance business by acquiring more than 100 of its small rivals. The company currently employs 3,500 employees in its 100 offices spread all-over Britain.
Towergate reported earnings of £94 million and sales worth £1.1 billion in 2006. It has grown so rapidly by targeting niche markets in the insurance sector. It is one of the very few companies that offer insurance of caravan parks and holiday homes.
Crowned Ernst & Young entrepreneur of the year in 2005, Peter Cullum is an avowed philanthropist. He owns a charitable trust that funds children’s charities. He is believed to have paid half of his £9.2m bonus into it last year. Any windfall for him and philanthropy would certainly move up on his list of priorities.
A potential sale would certainly benefit Towergate’s employees. Many of them could then expect windfalls of £45,000 through an employee share plan.
