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BP Marsh waits for Hyperion float

RESULTS: The share price of insurance investment company BP Marsh & Partners has gone nowhere for the past six months, but as the flotation of its main holding, global insurance broker Hyperion, approaches then expect investors to tap into the investment opportunity in BP Marsh's own shares.
October 24, 2012

Is now the quiet period at BP Marsh (BPM) before the share rise when its main investment, global insurance broker Hyperion, floats? Marsh first invested in Hyperion in 1994 and it has proved to be a fabulous investment. Just £3.72m has been invested for a current 13.84 per cent stake valued at £31.1m and equivalent to almost two-thirds of the Marsh portfolio. The stake is also worth 25 per cent more than Marsh's own market value of £25.4m which is anomalous for a cash rich company.

IC TIP: Buy at 87p

Hyperion is acquisitive and in 2012 has acquired UK insurance agent Windsor as well as a broker interests in Indonesia and Brazil. But Hyperion clearly wants to buy bigger. To do that it almost certainly needs to list on the London market and the IPO is provisionally earmarked for June next year. Once again Hyperion accounted for most of the uplift in BP Marsh’s net asset value (NAV). But it’s worth taking a look at the company’s second largest investment, a 30 per cent stake in Besso worth £4.2m. Besso specialises in North American casualty and property insurance and could be a star performer. The company has rapidly reduced bank debt and has won the contract to provide insurance to salvage the ill-fated Italian cruise ship, the Costa Concordia.

According to 59 per cent shareholder and chairman Brian Marsh, the current six months started “quietly”, is continuing “calmly” and won’t let shareholders down. Mr Marsh also considers dividends a “good idea” so expect another 1p a share payout for 2012-13.

BP MARSH & PARTNERS (BPM)

ORD PRICE:87pMARKET VALUE:£25.4m
TOUCH:85-89p12-MONTH HIGH:98.5pLOW: 86p
DIVIDEND YIELD:1.1%PE RATIO:7
NET ASSET VALUE: 178pNET CASH:£3.16m

Half-year to 31 JulIncome (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20113.142.346.90nil
20123.002.157.50nil
% change-4-8+9-