Global private equity company KKR is pondering a bid
Shares in the British internet-based insurance company esure rose by 9% on June 30 as rumours swept the market that private equity companies and overseas trader buyers are considering an offer for the company.
The shares were up by as much as 15% at one stage, but fell back after the company denied that it had received an approach. Nevertheless this did not altogether dampen speculation, with press reports admitting that it was not clear whether an approach had been made.
Specific speculation suggested that the giant global private equity company KKR is pondering a bid, and it is thought that a number of other potential private equity and trade buyers are circling the company.
On June 7 esure announced that it had hired Deutsche Bank to undertake a strategic review of its GoCompare subsidiary with the demerger of the business a possible option. Following that announcement analysts suggested that GoCompare might sustain a value of up to £620m. esure, which also has home, pet and travel insurance under the “Sheila’s Wheels” and other brands, is valued at just under £1.2bn at the prevailing share of 289p. The company reported underlying pre-tax profit of £82.9m on gross written premium of £550m in 2015.
Analysts suggest that any bidder would have to confront the fact that the chairman, Sir Peter Wood, owns 31% of the equity, and it is thought that he would be reluctant to accept an offer at lower than 500p.
KKR declines to comment.