Ares leads on latest insurance-focused continuation fund

Ares Management has taken the lead on a single-asset continuation fund transaction involving an asset in the insurance industry.

UK-headquartered buyout firm Preservation Capital Partners, which focuses on financial tech and services investments, has moved its stake in speciality insurance and reinsurance broker BMS Group into a continuation fund, Secondaries Investor has learned. The transaction, which has closed, was around $200 million in size, Preservation Capital’s managing partner and founder Jatender Aujla confirmed.

In September, Eurazeo invested £355 million ($451 million; €415 million) in BMS Group, acquiring a circa 34 percent stake in the business. The transaction saw Eurazeo and existing shareholder British Columbia Investment Management Corporation become majority shareholders with co-control of BMS Group, according to a statement at the time.

BMS Group was previously housed in Preservation Capital Partners Fund I, which closed slightly above target on £309 million in 2020, according to data from affiliate title Private Equity International.

Evercore advised on the transaction. The firm declined to comment on its participation in the deal.

Ares had an established relationship with both Preservation Capital and BMS through its direct lending platform, which gave it confidence in the team right from the start, Clement Beaudin, managing director in the Ares Secondaries Group, told Secondaries Investor. “The company’s track record of growth and strong alignment with Preservation Capital Partners and Eurazeo made it a standout among a growing set of [mid-market] GP-led opportunities,” he said.

Ares will continue to focus on opportunities where it can best leverage its platform to build a diversified GP-led portfolio, Beaudin added. While there are currently opportunities arising from the muted M&A market, Ares expects demand for continuation funds will continue to increase across the cycle as private equity GPs look to retain star-performing assets while providing liquidity options for their LPs.

Insurance assets have been favoured by the secondaries market in recent months. In September, AlpInvest Partners, LGT Capital Partners and StepStone emerged as co-leads in a complex, insurance-focused continuation fund deal involving two assets managed by the UK’s Pollen Street Capital, Secondaries Investor reported at the time.

Pollen Street portfolio companies Markerstudy, an insurance group, and regulated industries software provider Aryza were part of a two-asset continuation fund process worth £840 million. The GP-led was run concurrently with Markerstudy’s add-on acquisition of personal insurance brokering business Atlanta Group.

In October, fellow UK-headquartered financial software- and services-focused investor AnaCap was close to finalising a continuation fund deal involving assets it agreed to partially exit via M&A processes this year, Secondaries Investor reported.

The assets are commercial lines insurance broker MRH Trowe and tax-focused software developer Gestión Tributaria Territorial, Secondaries Investor understands. HarbourVest Partners and Schroders Capital are understood to be co-leads on the deal, which is worth around €300 million.

– Adam Le contributed to this story