Global broker Hub International Limited has announced that it has entered into an agreement with Los Angeles-based private equity firm Leonard Green & Partners (LGP). Under the agreement, Hub expects to receive a substantial minority investment from funds managed by LGP.
Hub has a current total enterprise valuation of $23 billion – the largest enterprise value on record for a private insurance broker.
Hub’s valuation has grown fivefold over the last decade, the company said. In 2013, when Hellman & Freeman (H&F) initially invested in Hub, the brokerage had a valuation of $4.4 billion and annual revenue of more than $1 billion. In 2022, Hub hit annual revenue of $3.7 billion and is now valued at $23 billion.
“Despite the headwinds of the pandemic, interest rate hikes, and a global economic downturn, Hub has demonstrated its ability to persevere and excel,” said Mark Cohen, president and CEO of Hub International. “In the last 4.5 years, we’ve delivered a 2.5-times ROI. Our relentless focus on investing in boundaryless resources that provide best-in-class advice and solutions for our customers and our dedication to attracting and retaining the best talent in the industry affirms my optimism and energy for the future potential of Hub.”
Hub attributed its growth to its ongoing investments in product specialisation, brand marketing, broadening its employee benefits and human resources capabilities, and more. The company also remains bullish on its aggressive acquisition strategy and broadening its geographic footprint.
The announcement of its partnership with LGP also signals Hub’s intention to explore acquiring additional minority investors in the coming months, the company said. The proceeds of these investments will be used to repurchase equity interests from existing equity holders. H&F will retain a controlling interest in Hub, while Atlas Partners will remain a significant minority shareholder. LGP will be joining Hub’s board, the brokerage said.
“Hub is an exceptional company – a gold-standard, specialty-focused insurance broker,” said H&F partner Hunter Philbrick. “H&F takes great pride in our long-term approach with the companies we invest in, and it has been a privilege to support Hub’s incredible growth journey over almost a decade. Hub is now the fifth-largest broker in the world and is growing faster today than at any point in its history. We look forward to continuing our relationship with the company as the largest shareholder, alongside the fantastic teams at Atlas Partners and now LGP.”
“We have admired Hub for a long time and are excited to partner with the entire Hub management team, Hellman & Friedman and Atlas to support the next phase of the company’s growth,” said Adam Levyn, partner at LGP. “Hub is the premier insurance broker and has all the attributes we look for in investments – a best-in-class management team, a differentiated culture, a long and consistent track record of success, and multiple ways to grow.”
The transaction is expected to close in the third quarter, subject to customary closing conditions and regulatory approvals.
Have something to say about this story? Let us know in the comments below.