LDC breaks new ground with £200m tech firm buyout

Private equity investor LDC has backed the management buyout of insurance technology firm SPP in a deal thought to be worth more than £200m.

David Rasche
David Rasche

The transaction is the largest to be completed by the Leeds office of LDC, part of state-backed Lloyds Banking Group, and the buyout firm’s largest in the North.

It is also thought to be the biggest deal of the year to date in Yorkshire.

The seller was Hellman and Friedman, the San Francisco private equity giant.

It paid £198m for SSP in a public-to-private transaction in 2008.

A spokesman for LDC declined to comment when approached by The Yorkshire Post.

Hellman and Friedman could not be reached for comment.

An industry observer said: “This is a real coup for LDC and the Leeds office has never done a deal this big.

“It’s good to see a local house backing a local business and a local team on a transaction of this size. You don’t see that happening very much.”

LDC knows the business well. It acquired a minority stake in SSP in 2004 and exited in 2006 when the Halifax company floated on Aim.

The latest transaction is seen as a play on SSP’s ability to leverage the power of big data to enhance the performance of insurers by helping them to price risk more effectively.

The company is a market leader in the provision of business critical IT systems and services to the general insurance industry.

SSP serves more than 1,000 insurance brokers and more than 160 insurers, including many of the world’s largest underwriters.

Its broking technology processes transactions worth more than £5bn in gross written premiums and over 1.1bn internet insurance quotes annually.

The company employs more 700 staff and is headquartered in Halifax but has operations in Australia, Far East, South Africa, Africa, India, Ireland and New Zealand.

It recorded core earnings of £20m in the year ending March 2014.

SSP (Software Solutions Partners) was founded by David Rasche, Laurence Walker and Nick Bate in 2002 through a £20.8m management buy-in of the Yorkshire-based division of US giant Computer Sciences Corporation.

The company started providing software systems to small and medium-sized insurance brokers.

LDC took a 30 per cent stake in the business in 2004, allowing it to hit the acquisition trail.

SSP floated on the junior stock exchange in 2006 with a market capitalisation of £70m.

A year later, the company made a £44m recommended offer for fellow AIM-listed business rival Sirius.

In summer 2008, Hellman & Friedman took SSP private for a recommended offer valued at £162m.

It is understood that Laurence Walker will remain as executive chairman following the LDC investment, while David Rasche, the senior independent director and former executive chairman, will exit the business.

He was awarded the Business Leader of the Year accolade in 2008 in the Variety Club’s Yorkshire Business Awards.

Mr Rasche started his career in business at the end of the 60s as one of the country’s first mobile disc jockeys.

A host of local advisors worked on the management buyout, which is expected to be announced today.

Deloitte did the lead advisory, debt and tax work for the deal, notching up its ninth successive transaction for SSP.

Martin Jenkins, senior partner for Yorkshire and the North East, is a long-standing advisor to the firm.

Leeds lawyers from Addleshaw Goddard and Squire Patton Boggs provided legal advice.

LDC (Lloyds Development Capital) last year celebrated the 25th anniversary of its Leeds office.

The buyout firm has invested more than £1.5bn of capital in more than 60 management teams over the last five years.

LDC prides itself on a long-term, relationship approach to private equity investment and the asset class’ ability to drive growth.

It typically invests between n£2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions.

Forefront of insurance technology

Software Solutions Partners has been at the forefront of insurance technology for the last three decades.

It is also one of Yorkshire’s largest and most successful technology companies.

SSP is a market leader in providing IT solutions to the

global insurance and financial services industries with almost 50,000 users in more than 50 countries.

It claims to have more than trebled turnover, profit and number of employees in recent years.

The business completed a refinancing exercise last year, with new senior debt of £125m and a revolving credit facility of £10m.