esure Group plc

esure Group plc's proposed Acquisition of the remaining 50% of Gocompare for £95 million

8 December 2014

esure Group plc ("the Group") today announces that it has conditionally agreed to acquire the outstanding 50 per cent. of Gocompare.com Holdings Limited ("Gocompare") for a consideration of £95 million, increasing its holding to 100 per cent. ("the Acquisition"). The Acquisition is subject to Competition and Markets Authority approval.

Highlights

·           Full ownership of one of the UK's leading financial services brands

·           Investment opportunities in the short term to drive expansion and diversification over the medium to long term

·           Earnings enhancing in year one on a cash basis

·           Further diversification of esure Group's income streams

·           Consideration of £95 million represents a multiple of 7.3x 50 per cent. of Gocompare's 2013 EBITDA; valuing Gocompare at £190 million overall

·           Funded by issuance of up to £125 million of subordinated notes

·           Subordinated notes are expected to meet the requirements of Solvency II, further strengthening the Group's capital position

·           Jon Morrell, current Deputy Chief Operating Officer of the Group, will be appointed as Gocompare Chief Executive Officer, to run Gocompare in Newport on a business as usual basis

Peter Wood, Chairman of esure Group plc, commented:

"This is another positive milestone for esure Group. Gocompare has always been an exciting business and it has developed strongly following our original investment into one of the UK's leading financial services brands. This move lays the ground for further development of Gocompare as part of the Group's strategy of diversifying income streams."

Stuart Vann, Chief Executive Officer of esure Group plc, commented:

"This is a great opportunity for the esure Group to acquire the remaining share of an important and innovative player in the price comparison market at an attractive price. While the esure Group and Gocompare will continue to operate on a strictly independent basis, regarding partnerships and comparison services, I believe that there are significant opportunities available for Gocompare to grow revenues and profitability over the medium to long term. Over the past seven years, I have overseen the investment in Gocompare and believe that the time is now right for esure Group to acquire the remaining 50% of the business and take the business to the next level.    

"I'm delighted to announce that Jon Morrell will become Chief Executive Officer at Gocompare upon completion. I have worked with Jon for four years and believe he is the right person to drive the business forward. His experience and knowledge across the market, in combination with the talented team that is already in place in Newport, will be a key asset for the business, as we look to enhance shareholder value over the coming years. Hayley Parsons, who founded Gocompare, will leave the business upon completion. I would like to pay tribute to all the hard work and innovation that Hayley has brought to the business from start-up to the present day.

"Our expectations for the Group for the full year remain unchanged."

Gocompare

Gocompare was established in 2006 and in 2007 the esure Group bought an option for £2.7 million to purchase a 50 per cent. holding in Gocompare, which was exercised in 2010. Gocompare has since grown to be one of the UK's top financial services brands and a leading price comparison website offering consumers a convenient way to compare and buy both financial and non-financial products including insurance, money services, travel and utilities and had over two million customers in 2013. In the space of seven years, Gocompare has grown rapidly and in 2013 achieved income of £110 million, profit before tax of £25 million and generated £25 million of net operating cash inflows. At the 31 December 2013, Gocompare had gross assets of £50 million. The Gocompare gross assets, the subject of the transaction, are therefore £25 million as at 31 December 2013, and Gocompare's profit before tax attributable to the assets, subject to the transaction, are therefore £13 million, for the year ended 2013.

Gocompare has a highly experienced, talented and motivated team based in Newport, and the business will benefit further from the leadership of Jon Morrell, as Chief Executive Officer, and the wider support from the Group. Gocompare will continue to be run on an independent basis with respect to partnerships and comparison services.

The selling shareholders of Gocompare are Hayley Parsons, Gocompare's employee benefit trust, Blue Boar Holdings Limited and certain current and former officers and employees of Gocompare.

Gocompare continues to perform in line with expectations and the guidance provided at the Group's interim results announcement.

Funding

The Acquisition will be funded by an issuance of up to £125 million of dated ten year tier two subordinated notes. Deutsche Bank AG, London Branch, has been appointed to act as sole lead manager and sole book runner.

Stuart Vann, Chief Executive Officer, and Darren Ogden, Chief Finance Officer, will commence a debt marketing roadshow with fixed income debt investors later this week and the Group expects to announce the final terms of the placement in due course.

Solvency Capital

Following the Acquisition of Gocompare, the Group's capital ratio under the current regime will improve modestly as the notes will qualify as lower tier II capital under Solvency I, restricted to a maximum value of 25% of the minimum capital requirement.

The Group's capital position will be strengthened under Solvency II as tier II debt will be permitted as qualifying capital up to a maximum value of 50% of the solvency capital requirement.

Conference call

A conference call for analysts and institutional investors will be held today at 8.30am (UK time).

The participant dial-in telephone number is +44 800 368 0649 or +44 203 059 8125 and quote "esure".

A copy of the investor presentation can be found on the Group website at: www.esuregroup.com/investors 

For further information:

Notes to editors

Jon Morrell, esure Group plc Deputy Chief Operating Officer and Managing Director of esure Broker, has over three decades of insurance experience. Jon has held senior roles in the insurance market at strategic and tactical levels since 1995 and has held "Approved" person status in various roles since 2001.

Jon has a proven track record of driving business performance and has been responsible for overseeing all of esure Broker's price comparison website relationships. Jon's ability to manage key and complex relationships has meant that he has won the trust and respect of staff, clients and colleagues across the industry.

Jon is well known by the current executive team at Gocompare through his previous roles in the industry. This will help ensure as smooth a transition as possible upon completion, as Jon assumes the role of Chief Executive Officer of Gocompare, subject to regulatory approval.