Financial News

  • 7 October 2013, 13:37

Goldman Fund Wins 720m Battle For Hastings

A fund managed by the Wall Street banking giant Goldman Sachs will next week emerge as the biggest shareholder in Hastings, one of Britain's fastest-growing insurance companies.

Sky News understands that GS Capital Partners, Goldman's private equity arm, is to invest 150m in return for just under 50% of Sussex-based Hastings.

The insurer's founders and management will retain the rest of the shares, with Neil Utley, Hastings' chairman, crystallising a fortune worth tens of millions of pounds from the sale of part of his stake.

Hastings will announce the equity investment alongside the launch of a bond issue that will raise approximately 420m.

In total, the transactions will value the insurance company at 720m, making it a strong candidate to enter the FTSE-250 index if it lists on the stock market as expected in several years' time.

Sumit Rajpal, a New York-based managing director at Goldman, is expected to join Hastings' board as part of the deal.

Hastings is focused on an aggressive expansion strategy following an acceleration in earnings before interest, tax, depreciation and amortisation (EBITDA) to roughly 70m last year.

The company has around one million customers, and Gary Hoffman, who joined last year as its chief executive, has stated a target of trebling that number by 2020.

Mr Hoffman led the turnaround of Northern Rock during its period in Government ownership following the run on the mortgage lender in the autumn of 2007 which heralded the start of Britain's banking meltdown.

He then spent two years as chief executive of NBNK Investments, a vehicle set up to acquire retail banking assets, but which was rebuffed in favour of the Co-operative Group in the contest to buy 632 branches from Lloyds Banking Group.

That deal collapsed amid a financial crisis at the Co-Op earlier this year.

Based in Bexhill, East Sussex, Hastings employs more than 1400 people, over 80% of whom are understood to be shareholders in the company.

Hastings' valuation from a deal has been buoyed by its recent financial performance as well as the successful flotation on the London Stock Exchange of rivals such as Direct Line Group, although another competitor, Esure, has seen its shares slide since listing.

Mr Hoffman's arrival last year triggered suggestions that Hastings would also look to go public, but the company has no plans to do so.

Acquired by Insurance Australia Group in 2006, Hastings changed hands again in 2009 when it was subject to Mr Utley's management buyout.

Evercore and Peel Hunt, two City firms, have been advising the company on the talks about a stake sale, while Credit Suisse and JP Morgan have been overseeing the bond issue.

Neither Goldman nor Hastings could be reached for comment on Saturday.