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Irish non-life broker Arachas in private equity-backed MBO

Irish non-life broker Arachas in private equity-backed MBO

DUBLIN: Arachas, Ireland’s fifth-largest non-life commercial broker, has been bought out by its senior management for an undisclosed sum. Established in 2004, the company, which employs more than 130 people at offices in Dublin, Cork and Waterford, is a specialist corporate, SME and affinity scheme brokerage providing insurance facilities and financial-planning services to businesses. Sovereign Capital, a UK private equity firm backed the buyout, which is subject to approval from the Central Bank.

Following the transaction, Arachas will continue to be led by Donal Cronin who said that having secured the financial backing, it hoped to grow the business further though a combination of organic growth and bolt-on acquisitions. Arachas, whose name is the Irish for insurance, saw revenues rise by 9 per cent in 2015 from €13.8 million to €15.2 million as operating profit increased from €998,271 to €1.15 million. The group had net assets for the 12 months ending December 31st, 2015, of €7.4 million, up from €6.5 million a year earlier. Arachas was advised by AIB Corporate Finance and debt to support the transaction was provided by Five Arrows direct lending, Rothschild.

Sovereign, which operates a “buy and build” strategy to help investee companies grow, has invested in more than 240 transactions since it was established in 2001. Other businesses backed by the group in the financial services and insurance sectors include the UK-headquartered Kindertons and Cordium. Kindertons, a provider of outsourced accident management services for motor and insurance brokers, has gone on to double revenues to more than £100 million since being backed by Sovereign. Cordium, a global fund services business has made seven acquisitions during Sovereign’s ownership and has grown to become one of the largest regulatory compliance consultancies in the world.