Pollen Street runs $1bn continuation fund on insurance assets

Three buyers co-led the novel transaction involving insurance asset Markerstudy, which was separately involved in an M&A process.

AlpInvest Partners, LGT Capital Partners and StepStone have emerged as co-leads in a complex insurance-focused continuation fund deal involving two assets managed by the UK’s Pollen Street Capital.

Pollen Street portfolio company Markerstudy, an insurance group, this month agreed to acquire Atlanta Group, which is the personal insurance brokering business of independent insurance distributor Ardonagh Group.

Markerstudy’s acquisition of Atlanta, which is subject to regulatory approvals, will create a personal insurance brokerage business with over £3 billion ($3.7 billion; €3.5 billion) in annual premiums, according to a 15 September statement about the M&A process.

It now appears that Markerstudy and another Pollen Street asset – regulated industries software provider Aryza – were part of a two-asset continuation fund process worth £840 million ($1.02 billion; €966.14 million). This GP-led process is understood to have been conceived last year and was run concurrently with the add-on acquisition of Atlanta Group.

Lazard advised on the secondaries part of the transaction, according to three sources familiar with the matter.

The continuation fund will help London-listed Pollen Street to continue to support and grow the two “high-performing” assets, chief financial officer Julian Dale wrote in the firm’s interim accounts for the six months ending 30 June, published last week. The transaction is expected to complete later this year.

Pollen Street acquired Markerstudy in 2021 via its £1 billion Pollen Street Capital IV fund, while Aryza was held in the £402 million Capital III vehicle, according to the interim results document.

Investors that have backed either Fund III, Fund IV or both include Norway’s Argentum, Rhode Island State Treasury and Lombard Odier Darier Hentsch & Cie, according to data from affiliate title Private Equity International.

Secondaries Investor understands there was strong approval for the secondaries transaction from the funds’ limited partnership advisory committees, and that there was also strong take-up of the liquidity option by LPs. The transaction was oversubscribed, one of the sources said.

The secondaries deal is understood to have included follow-on capital.

The transaction is unusual due to the involvement of the separate M&A process, which was run concurrently. While Markerstudy’s acquisition of Atlanta was not part of the secondaries process, secondaries buyers wanted to ensure clarity around the M&A process before backing the GP-led, according to two sources familiar with the matter.

The deal was also complex due to the regulated nature of the industries the assets are involved in, the sources said.

Pollen Street is no stranger to the secondaries market: in 2021 it raised more than £185 million for a top-up fund called PSC Accelerator, which served as a continuation fund for some assets from its previous vehicles, according to a statement from Kirkland & Ellis about Pollen Street’s fourth flagship fundraise.

Financial services-focused Pollen Street went public last year when it merged with credit investor Honeycomb, a listed investment trust it managed.

Spokespeople for Pollen Street, AlpInvest and Lazard declined to comment. Separate spokespeople for LGT and StepStone confirmed they were co-leads on the deal without providing further details.