Private equity firm CVC Capital Partners Ltd said on Monday it had agreed to buy a majority stake in Cunningham Lindsey Group Ltd in a deal that a source familiar with the matter said valued the insurance claims management company at up to $1 billion.
Cunningham Lindsey had been put up for sale by buyout firm Stone Point Capital LLC and Fairfax Financial Holdings Ltd (FFH.TO), hoping to fetch over $1 billion, people familiar with the matter told Reuters in March.
The parties involved declined to disclose or comment on the value of the transaction but the source familiar with the matter said the deal valued Cunningham Lindsey at between $900 million and $1 billion, including debt.
Fairfax, which according to a financial statement had a 43.4 percent stake in Cunningham Lindsey as of the end of June, said it would receive about $260 million from the sale. This would imply an equity valuation of about $600 million for the whole company.
The North American insurance sector has seen few private equity deals this year as low valuations have deterred many company owners from selling. New Mountain Capital agreed to assume control of AmWINS Group Inc, the largest wholesale insurance broker in the United States by premiums placed, in a $1.3 billion deal earlier this year.
Stone Point bought a controlling stake in Tampa, Florida-based Cunningham Lindsey from Fairfax in December 2007 through its fourth private equity fund -- Trident IV -- paying about C$88 million for a 51 percent interest.
Cunningham Lindsey's services include claims adjusting, appraisal and claims and risk management for property and casualty insurance losses. Its customers include insurance and reinsurance companies, insurance syndicates, insurance brokers and multinational corporations in 61 countries.
"CVC shares our vision for the future expansion of Cunningham Lindsey, and together with our long-standing partners Stone Point and Fairfax, will enable us to continue to expand and enhance our position in the key insurance markets," Cunningham Lindsey CEO Philippe Bes said in a statement.
Bes will continue to manage the company and join its board of directors while Stone Point and Fairfax, along with the company's management team, will remain substantial and active shareholders, CVC said.
Fairfax said it would invest up to approximately $35 million of its proceeds from the sale in shares of Cunningham Lindsey on closing of the transaction, expected by the end of the year, in order to remain a minority shareholder.
Bank of America Merrill Lynch and Debevoise & Plimpton LLP advised Cunningham Lindsey on the deal and Willis Capital Markets and Advisory, Weil, Gotshal & Manges LLP and Clifford Chance advised CVC. Bank of America, Morgan Stanley Senior Funding Inc, RBC Capital Markets and UBS provided financing.
(Reporting by Greg Roumeliotis in New York; editing by Andrew Hay)