Barclays sells Direct to LDC(3)

Barclays Private Equity, the mid-market buyout arm of the UK bank, has sold Direct Group, a UK insurance services business, to Lloyds Development Capital in a deal that values the business at £40 million.

John Walker, director at Barclays, told PEO: “We were initially attracted to Direct Group because of its strong client base and its impressive management team. It has been a great investment for us, delivering an internal rate of return of nearly 30 percent, and a money multiple of around 2.5 times.”

Direct Group provides a range of services to the insurance sector, including policy administration and fulfilment, commission management, premium collection, claims handling and performance reporting.

Since Barclays bought the business in 2002, Direct Group has doubled its earnings before interest, tax and amortisation, and has expanded its range of blue chip retail partnerships.

Co-founders Nigel Clack and Geoff Woodhead have departed, to be replaced by Derek Coles, who has been managing director of the business since 2006, and Scott Hough.

Barclays’ other deals in the financial services sector include Eudea, an Italian provider of secured personal loans that the bank bought in September 2006, and Cabot Financial, a UK debt acquirer that it bought in January 2004. Barclays sold Cabot in April 2006 to Nikko Principal Investments for £275 million, realising three times the original investment.

The bank’s buyout business is currently investing the €1.65 billion Barclays Private Equity European Fund II which closed in February 2005.