Towergate up for sale as investors flee insurance broker

 
Tim Wallace
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Towergate is headquartered in an iconic Aldgate office
Europe's biggest privately owned insurance broker Towergate is up for sale just a month after its boss Mark Hodges quit last month.

The troubled firm reported pre-tax losses of £112.7m for the first three quarters of the year, compared with a loss of £19.1m over the same period of 2013.

If it is not sold by the end of the year, it is likely Towergate will have to start selling off non-core units to meet debt repayments and improve its cash position.

The firm has been approached by potential buyers, and it is thought that two bidders want to buy the whole business, while others are looking at taking smaller chunks.

It has hired Rothschild and Evercore as advisers to evaluate the bids.

If no suitable buyer is found, another option would be a debt for equity swap, giving bondholders ownership of the business.

Towergate entered the market in 1997 and expanded rapidly through a series of debt-funded acquisitions, to employ around 5,400 people in the UK.

Investors fear the group has over-extended itself, and the price of its bonds have dived since Hodges quit.

But the insurance broker’s management remains upbeat about its prospects.

“Towergate is a unique asset for someone to own in this industry,” said interim executive chairman Alastair Lyons.

“The approaches we have received underline this and are testament to the group’s strength in its primary markets.”