Cinven picks up Premium Credit from GTCR

The firm’s 11th deal from its fifth fund values the specialty finance provider at £462m

UK-based private equity group Cinven has agreed to acquire UK specialty finance provider Premium Credit Limited for an enterprise value of £462 million (€591 million; $697 million), according to a statement from the firm.

Cinven is acquiring Premium Credit from GTCR. The Chicago-based private equity firm picked up the business in November 2012 from MBNA Europe, an affiliate of Bank of America Corporation using capital from its $3.25 billion GTCR X.

According to a release on Premium Credit’s website, at the time of GTCR’s acquisition the company had a total asset value of approximately £900 million (€1.15 billion; $1.36 billion).

The return generated for GTCR through the sale is unclear. GTCR did not respond to a request for comment at press time.

The debt in the transaction includes £200 million (€256 million; $302 million) of high-yield bonds that Premium Credit issued in April, according to a source familiar with the deal. Cinven declined to comment beyond the statement.

Premium Credit, which is headquartered in Surrey and employs more than 300 people, enables businesses and individuals to spread the cost of their insurance premiums and other essential purchases, as well as providing financing for the payment of annual fees such as professional fees, membership subscriptions and school fees, Cinven said.

In 2013 Premium Credit, which has approximately 2 million customers and works with 4,000 intermediaries, achieved gross advances of £3.7 billion and processed 25.8 million transactions.

The Premium Credit management team will continue to be led by chief executive Andrew Doman, who joined the business at the time of its acquisition by GTCR.

The acquisition marks Cinven’s eleventh investment from its fifth fund, a 2012-vintage €5.3 billion vehicle. Other investments from the fund include healthcare contract research organisation Medpace, which the firm acquired in February 2014 from CCMP Capital Advisors for $915 million, and Nordic software company Visma Group, for which Cinven teamed up with Kohlberg Kravis Roberts and HgCapital in a deal valuing the company at NOK 21 billion (€2.5 billion; $3.5 billion).

As banks continue to consolidate their focus on core products, opportunities are opening up for third party providers. Premium Credit is well-positioned to build a diversified UK specialty finance business through both organic expansion into new products and selective acquisition, Cinven said.

Cinven has made several investments in the financial services sector, picking up aircraft leasing business Avolon in May 2010 – which it floated on the New York Stock Exchange last month – and German and Austrian life insurance and retirement products company Heidelberger Leben in April 2014.