Howden, the British insurance broker, is close to finalizing a $10 billion (£7.7bn) acquisition of US-based Risk Strategies, a move that could set the stage for a stock market listing valuing the company at more than $30 billion (£23.2 billion), according to a report from Sky News.
A binding agreement is being targeted by the end of the month, with the purchase expected to be partly financed through a share sale of approximately $4 billion (£3.1 billion), according to banking sources. Reports of the potential deal initially came out in February.
Mubadala, the Abu Dhabi-based sovereign investment fund, and Hg Capital, an existing Howden shareholder, are expected to contribute around $2 billion (£1.5bn) each in equity. The new investment would value Howden at approximately $20 billion, implying a combined valuation of around $30 billion for the group.
The acquisition would mark a significant step for Howden and its founder, David Howden (pictured), who has expressed interest in expanding into the US retail insurance market. A successful deal would position the company for a potential US stock market flotation within the next one to three years, with 2027 considered the most likely date.
Barclays and Morgan Stanley are advising Howden on the negotiations, while Evercore is acting for Kelso and Risk Strategies.
One source indicated that the timeline for finalizing the agreement is not yet certain and could extend into next month.
A Howden spokesperson declined to comment.
Looking ahead, Howden said it is continuing to focus on organic growth, strategic M&As, as well as investment in talent and operational improvements.
For the financial year ending September 30, 2024, the company reported a 23% increase in adjusted revenue to £3.01 billion, up from £2.44 billion in the previous year. Organic revenue growth was 15%, compared to 13% in fiscal 2023.
Meanwhile, adjusted consolidated EBITDA rose to £922.2 million, with the EBITDA margin remaining steady at 31%, down slightly from 32% the previous year.
Howden also saw growth across its divisions, with insurance broking posting 14% organic revenue growth, and reinsurance increasing by 30%. DUAL, the company’s managing general agent division, reported 6% organic growth.
In February, the company acquired aviation specialist broker Forbes Insurance Limited and the book of business from Hill Aviation Insurance Services.
