Private Equity News & Analysis

Electra to float Premium Credit

The firm has hired boutique investment bank Lexicon Partners to advise on a possible London listing for the UK-based specialist finance group.

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Electra Partners Europe, the European private equity house, is considering plans to for a flotation of Premium Credit, the UK-based speciality finance group.

 

Electra has hired investment bank Lexicon Partners to advise on plans for an exit of the business, with a stock market listing the preferred exit. Lexicon, which confirmed that it has been hired to look at disposal options for the business, was unavailable for comment.

 

Sharon Beckett, managing director of Premium Credit, sent a letter to its brokers in July, informing of Electra’s plans to sell or float the businessat Premium Finance. According to Beckett, Electra has received a number of approaches for the business.

 

In 1996 Electra backed a £230m management buyout of Vendcrown, the holding company of Premium Credit, acquiring the business from HSBC. Electra Investment Trust invested £16.1m for a 33 per cent stake in the business. Other funds managed by Electra Fleming invested £5.4m for an eleven per cent stake.

 

Premium Credit is a UK-based provider of short-term installment finance. The company finances commercial insurance premiums, personal insurance premiums and non-insurance services including golf and leisure club memberships, audit fees and school fees. The business, based in Epsom, Surrey, was established by HSBC in 1988.

 

In the year to 31 December 2002 the company generated £1.8bn of gross advances. Its revenues were £65.8m and the profit after tax was £21.6m (2001: £11.3m).

 

If Electra opts for a listing, it will follow in the footsteps of Apax Partners and Hicks Muse, which successfully completed a stock market listing of UK directories business Yell Group last month, valuing the business at £1.14bn. The Yell offering was five times oversubscribed, suggesting that there is an appetite in the public markets for successful, growth businesses.

 

Electra Partners, which was formed following a management buyout from Electra Investment Trust in November 1999, is currently investing from its E1bn debut fund which held a final close in April 2001.