Insurance firm Parabis is set for a £50m cash injection after being granted an ABS licence by the SRA, allowing it to take private equity investment from Duke Street.
Parabis chief executive Tim Oliver” src=”/Pictures/web/w/d/g/Oliver_15_150.jpg” />
It is the first private equity-backed deal to be approved by the legal watchdog. Parabis has long held ambitions to convert to an ABS model (14 April 2011) and formally revealed it was in talks with Duke Street in February (6 February 2012).
At that time the firm had intended to be one of the first approved by the SRA aiming to go live by the end of February, allowing to make a string of acquisitions. However, delays in the application process meant the deal was put on hold (19 March 2012).
Today (22 August), Duke Street partner Iain Kennedy said in a statement: “The intention is to support management with Duke Street’s operational expertise in transforming the business from a professional services firm to a business process outsourcer, and to drive the continued consolidation of the legal services industry via Duke Street’s successful buy-and-build model.”
Those plans included up to five acquisitions of firms valued between £10m and £30m by the end of 2012, with the deals centring on the provision of services to the claims management industry, including law firms (6 February 2012).
As part of the transaction, Duke Street has agreed to provide equity upfront, with additional funding from the syndicate of banks, which includes RBS, Lloyds, Santander and Ares.
Duke Street operating partners Paul Lester and Bob Scott will act as non-executive board members as part of the deal.
Parabis chief executive Tim Oliver said the regulatory approval was a “milestone” for the firm. “It signals our intention to be at the heart of change in the insurance and legal sectors. We’re very excited by the possibilities now open to us.
“While at times we have felt frustrated at the time it has taken to secure our licence, we are very pleased with the robustness of the application process,” he added.
The firm is parent to claimant subsidiary Cogent Law, defendant firm Plexus Law, Parabis Claims Solutions, which specialises with claimant legal services, and health and safety group Argent. Parabis made its debut in The Lawyer UK200 in 2011 with turnover of £100m. This came 10 years after its launch in 2000 as Rymills Law, a road traffic accident claims handling firm, with former Berrymans Lace Mawer partner Oliver at the helm.
At the latest year end the firm posted revenues of £108m, up 8 per cent from the previous year with net profit of £18.4m, 47.2 per cent up on the £12.5m net profit it posted a year earlier. Duke Street said it valued the firm at between £150m and £200m.
Over the last decade Parabis has made a series of acquisitions in the rehabilitation market before switchings it attention to the legal sector following the introduction of the Legal Services Bill in 2006.
In 2009 Parabis Law became the parent group of defendant firm Plexus and claimant firm Cogent, while Parabis Ltd became an outsourced claims management group and consultancy and Argent was established as the parent of the group’s professional services firms, which include loss adjustors.
The firm has picked up a raft of blue chip clients in the insurance sector including QBE European Operations, the RBS insurance group, which owns Direct Line, RSA and Chartis.
In 2011 Plexus usurped Kennedys as the provider of personal injury claims work to Tesco, which Kennedys had inherited as part of its acquisition of Halliwells’ Sheffield office last year.
For more on Parabis see here.