A year ago we expressed surprise that BP Marsh & Partners (BPM) had sold 15 per cent of its stake in worldwide insurance broker Hyperion. Now it's in the process of selling out completely before Hyperion's expected stock market flotation which could take place in 2014.
At first glance the reasons for doing this seem odd because Hyperion is growing fast and has been Marsh's "largest and best investment", according to chairman Brian Marsh. But Hyperion was so successful that it was accounting for around 60 per cent of the company's net asset value. It also paid "stingy" dividends while the size of acquisitions it was making steadily diluted Marsh's share stake. That trend also increased potential conflicts over existing minority protection agreements that could have thwarted future takeovers.
Marsh sold its first stake in Hyperion at a price of 380p and the remainder will go for 520p as long as all regulatory agreements are in place by 15 October 2013. Net cash from the second stage sale will amount to £20m - or more than half Marsh's market value - and the company is already looking at further acquisitions: the leading candidate is in Australia. And while all eyes have been on Hyperion, last year's results included turnaround results from both insurance broker Besso and financial adviser LEBC.
BP MARSH & PARTNERS (BPM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 129p | MARKET VALUE: | £37.7m | |
| TOUCH: | 128-130p | 12-MONTH HIGH: | 130p | LOW: 86p |
| DIVIDEND YIELD: | nil | PE RATIO: | 7 | |
| NET ASSET VALUE: | 190p | NET CASH: | £1.7m | |
| Year to 31 Jan | Operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | -1.93 | -2.71 | -5.9 | nil |
| 2010 | 1.18 | 0.06 | 1.6 | 1.00 |
| 2011 | 4.89 | 3.01 | 8.9 | nil |
| 2012 | 6.38 | 4.38 | 12.4 | 1.00 |
| 2013 | 8.23 | 6.20 | 19.4 | nil |
| % change | +29 | +42 | +56 | -100 |
