Howden advances with $10bn acquisition of Risk Strategies
- Howden is nearing a $10bn acquisition of US-based Risk Strategies.
- The deal is partly financed by a $4bn share sale with significant backing from Mubadala and Hg Capital.
- Completion of this acquisition could lead to a stock market floatation valued over $30bn within three years.
Howden, a British insurance broker, is on the verge of finalizing a significant acquisition valued at $10bn, which targets Risk Strategies, a prominent US-based insurance firm. This acquisition, backed by the investment firm Kelso, is anticipated to close by the end of this month, indicating a strategic move for Howden as it aims to penetrate the highly competitive US retail insurance market. This potential deal is structured to pave the way for a future stock market flotation that could see Howden's valuation soar to over $30bn. Investment plays a crucial role in this transition, as the projected acquisition price will partly be financed through a share sale estimated to raise around $4bn. The strategy involves significant equity contributions from both Mubadala, a sovereign investment fund based in Abu Dhabi, and Hg Capital, an existing shareholder in Howden, each contributing approximately $2bn to support the growth of the London-based business. Analysts and banking sources indicate that this new equity investment aligns with a valuation of about $20bn for Howden, building towards a larger collective valuation for the firm. The resultant acquisition is not just a pivotal moment for Howden; it signifies its aspirations for expansion into the US market and its intent to follow through with a public listing within a timeline of one to three years, with 2027 being the most cited target year for such an event. Financial heavyweights Barclays and Morgan Stanley are reportedly advising Howden during these negotiations, while Evercore is serving the interests of Kelso and Risk Strategies. Given the considerable scale of the transaction and its implications, industry executives are closely monitoring the progress of these talks. However, while momentum appears strong, the timetable regarding the announcement of the Risk Strategies acquisition could face delays, extending potentially into the next month, as stated by one source familiar with the negotiations.