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PSC on the prowl for new local and UK acquisitions

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PSC Insurance Group has received binding commitments from investors to support its $60 million capital-raising to fund new broking acquisitions.

The Melbourne-based group made the announcement last week in a market update, where it said broking targets in Australia and the UK have been identified.

“The group has a good pipeline of acquisition opportunities,” PSC says in the update. “In particular, we are considering acquisitions of UK and Australian commercial broking businesses, with a number materially progressed.”

Chairman Brian Austin told shareholders at the company’s recent virtual AGM that the business expects to make further purchases in the UK, a market where it has invested significantly by acquiring complementary broking firms.

MD Tony Robinson told insuranceNEWS.com.au the UK has been a source of “great contribution” to PSC.

“We believe it’s a solid, sensible strategy and we’re executing it well,” he said of the business plan for the UK.

PSC’s market update says the group has made a strong start to the new financial year.

In the four months to October, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 40% from a year earlier, boosted in part from the strong performance of its London-based broking business Paragon International. PSC acquired the Lloyd’s broker for £42 million ($76.2 million) last year.

The company expects underlying EBITDA in this financial year to fall at the top end of its $65-70 million guidance. In the last financial year, the business reported a 32.7% rise in underlying EBITDA to $57.4 million.

Trading conditions have been good despite the economic fallout from COVID-19, PSC says.

Mr Robinson says this is “more of a reflection of the nature of the industry because insurance is an essential spend for businesses”.

“The fact that they have continued to trade is a tribute to all of those businesses,” Mr Robinson told insuranceNEWS.com.au. “It’s those efforts that they put in to make those businesses continue to operate through this difficult period that means that essential spend continues.

“Are we delighted and thrilled with the resilience of the economy and particularly our customers? Of course.”