KKR seals $2.4bn claims services deal

Kohlberg Kravis Roberts will acquire Sedgwick Claims Management Services for $2.4 billion from a group of investors including Hellman & Friedman and Stone Point Capital, according to a statement.

Sedgwick specialises in workers’ compensation, disability, warranty, credit card claims and other services for customers in the US and Canada. KKR is acquiring the company using capital from its North American Fund XI, which had collected about $8.3 billion toward a $10 billion target as of last October, Private Equity International reported. The deal is expected to close during the first quarter of 2014.

“This is a critical time for employers as they adjust to an evolving health care delivery model, the shifting demographics of the workforce and a multitude of additional challenges,” Tagar Olson, head of KKR’s financial services investment practice said in the statement.

Hellman & Friedman and Stone Point acquired Sedgwick for about $1.1 billion from an investor group including Thomas H Lee Partners and Evercore Capital Partners in 2010. Under Hellman & Friedman and Stone Point’s ownership,

Sedgwick’s employee headcount grew from 6,500 in 150 locations to more than 11,000 employees in about 200 locations.

KKR and Stone Point both manage KKR – SPC Merchant Advisors, a $300 million joint venture that provides debt and equity for mid-market businesses. The two firms seeded KKR – SPC with $150 million from Stone Point’s Trident V Fund and $150 million from KKR’s balance sheet. The business is separate from KKR's existing capital markets arm that lends to the firm’s own portfolio companies as well as third parties.