Hub International Ltd. said Friday that Los Angeles-based private equity firm Leonard Green & Partners LP would make “a significant minority investment” valuing the brokerage at $23 billion.
The money will be used to buy out some shares from existing investors, and Hub plans to bring in additional minority investors in the coming months, Hub CEO Marc Cohen said in an interview.
The brokerage house, which is the largest private equity-owned insurance broker and has been one of the most acquisitive brokers over the past 20 years, plans to continue acquiring rivals, he said.
Hellman & Friedman, which invested in the brokerage in 2013, will continue to have a controlling stake in Hub, and Altas Corp., which invested in Hub in 2018, will remain a significant minority shareholder in the brokerage.
“The money coming in will help provide liquidity for existing shareholders,” Mr. Cohen. “However, it is important to note that Leonard Green Partners and Hellman & Friedman are open to further investment in the organization to support future growth initiatives and strategies.”
The $23 billion company valuation represents about a 2.5 return on equity compared to the valuation at the time of the Altas deal “despite incredible headwinds,” including the Covid-19 pandemic, Cohen said.
Hub’s revenue reached $3.7 billion in 2022. It has been one of the most acquired brokerages in the past 20 years. Last year, the Hub completed 70 deals and it remained active in the first quarter of 2023, announcing 10 deals, according to Optis Partners LLC.
The M&A markets for insurance agents and brokers, which has been active for several years and reached record levels in 2021, began to slow down in the second half of 2022.
However, Hub plans to continue with its aggressive acquisition strategy.
“We’re on track in 2023 to have the best year we’ve had from an acquisition standpoint, both in terms of revenue and number of acquisitions,” Cohen said.
Target areas for growth include managing general agents, retirement planning and wealth management companies and regional expansion, he said.
Hub is the fifth largest brokerage in the world, according to Business insurances latest ranking. Its business is divided into approximately 47% commercial retail, 29% employee benefits, 15% personal lines and 8% wholesale.