Pemba's exit from Australian insurance broker falls through

The deal was conditional upon, among other things, the delivery of due diligence materials by an agreed date. This deadline was not met, and the parties were unable to agree on a revised schedule, AUB said in a statement. The company added that it would continue to pursue M&A opportunities.

In August, AUB announced it would acquire Pemba’s interest in Coverforce and then work with the private equity firm to secure the interests of other shareholders, with the aggregate consideration expected to be A$150-200 million ($102-136 million). This was to be achieved “either by AUB Group reaching an agreement with those other shareholders or through Pemba Capital exercising its exit rights.”

However, Jim Angelis, founder and CEO of Coverforce, said that Pemba had no authority to undertake a sale. Legal proceedings commenced later the same month, with Pemba challenging the validity of a revised shareholder agreement that granted equity to an executive from a company acquired by Coverforce.

Established in 1994, Coverforce claims to be Australia’s largest privately-owned insurance broker. It provides group income protection insurance for blue-collar workers and serves as a general insurance broker focused on the small and medium-sized enterprise (SME) market. The company is headquartered in Sydney and has branch offices in Melbourne, Southport, and Adelaide, as well as a partner network.

ING bought a 50% stake in Coverforce in 1998 and exited via a management buyback seven years later. Pemba – then known as RMB Capital Partners – invested an undisclosed sum in 2012 with a view to helping accelerate growth. Since then, there have been several bolt-on acquisitions.

Formed in 1998, Pemba specializes in buy and build partnerships with the owners and managers of private businesses. HarbourVest Partners completed a fund restructuring in 2016 and made an anchor LP commitment to Pemba’s latest fund, which reportedly closed at A$650 million the same year.

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• Topics
• Australasia
• Trade sale
• Financials
• Australia
• Pemba Capital Partners
• insurance