Keoghs plans ABS launch with private equity backing

North West firm Keoghs looks set to launch as an alternative business structure (ABS) in 2013 with external investment from a private equity house.

It is being reported that LDC – a private equity house which is part of Lloyds Banking Group – has muscled out rivals Bowmark Capital to seal a deal with the Bolton-based insurance firm.

Neither Keoghs or LDC have confirmed the link-up.

However, The Lawyer understands Keoghs hopes to get ABS approval from the SRA by the end of the calendar year. The SRA refuses to comment on individual ABS applications until they are authorised due to commercially sensitive information.

A spokesperson for Keoghs said: “Like many firms in our sector, we’ve been exploring the options presented by an alternative business structure (ABS) as a means of accelerating our long-term growth strategy.

“We have reached a provisional agreement with an external investor who shares our ambition and appetite for growth, however completion remains subject to full SRA approval. Keoghs has established a leading position in the defendant insurance sector, achieved by continually evolving our business to ensure we can provide clients with cost effective, quality services.

“We’re confident that securing external funding will enable us to accelerate the development of complementary services and invest further in our people, processes and infrastructure, all of which will benefit the long-term interests of our clients.”

LDC declined to comment.

According to The Lawyer’s estimates for 2011-12, Keoghs pulled in £47.5m – a 15 per cent increase in turnover from a 2010-11 figure of £41m. Average profit per equity partner was also estimated to have increased from £420,000 in 2010-11 to £500,000 for the last financial year.

The specialist insurance firm, which also has a strong commercial offering, employs an estimated total of 820 staff in its two offices in Bolton and Coventry.

The Lawyer revealed earlier this year (28 April 2012) that the firm was in exclusive ABS talks with private equity firm Bowmark Capital about taking external investment. But it now appears that LDC is the preferred partner, with a portfolio valued at £2bn.

This month has seen two of the biggest ABS applications given the green light, with Irwin Mitchell and Parabis-Duke Street granted licences (3 September 2012).

The SRA has a team working on around 165 stage two detailed applications following 267 stage one expressions of interest submitted since the start of the year.