3i makes 2.1x return on Hyperion exit

The UK-listed group has sold its minority stake in the insurance business to General Atlantic, chalking up its fifth realisation since the beginning of the year.

3i, the London-listed group, has agreed to sell its 22.8 percent holding in Hyperion Insurance Group to General Atlantic.

The transaction will value the company at £250 million (€296 million, $379 million), and generate a 2.1x return on investment for 3i. The firm is to receive nearly £46 million in proceeds from the sale.

The changing shareholder structure will also see General Atlantic acquire 80 percent of the stake held by BP Marsh, a UK-based early-stage investor, as a result of which GA will own just over 30 percent of Hyperion. The rest of the shares will remain in the hands of its management and employees, who have not announced any intention to take part in the sale.

Hyperion is an insurance intermediary group with broking and underwriting divisions. 3i bought a £31 million stake in the business five years ago, with the aim of supporting the company’s international expansion strategy.

For a rapidly growing business, finding a minority equity investor who fits culturally and adds genuine value is critical

David Howden

The company now operates in 28 countries – up from 14 in 2008 – and generates 50 percent of its revenues outside Europe, half of which comes from the Asia Pacific region. Staff numbers also expanded from 340 to 1,400 over the period, while revenues grew from £42 million prior to 3i’s investment to around £110 million in the 12 months to 30 September 2012.

“For a rapidly growing business, finding a minority equity investor who fits culturally and adds genuine value is critical. In the last five years we have had exactly that from 3i who have helped the business in partnership with our original investors,” said David Howden, chief executive and founder of Hyperion.

This divestment is the fifth by 3i since the beginning of the year. In February, it scored a 2.6x return on the CAD$975 million (€751 million, $960 million) sale of Canadian manufacturer Mold-Masters, and sold UK business services provider Enterprise to Spanish infrastructure group Ferrovial for £385 million. It also sold UK restaurant chain Giraffe to Tesco for £48.6 million in early March, and reaped a reported 5.5x return when divesting German engineering business Norma Group in January.

This spate of exits comes after a year that saw a sharp slowdown in realisations for the firm, with sales proceeds dropping to £210 million in the nine months to 31st December 2012, down from £741 million in the same period the year before.

3i chief executive Simon Borrows said in the firm’s last interim statement that 2013 would see “a number of key realisations as well as an increasing level of investment activity.”

At the beginning of March, the firm agreed to buy Brazilian eyeglass retailer Óticas Carol in a deal that includes R$108 million (€42 million, $54 million) in equity.