New York, US; 9 August 2022
- FRP has a footprint of 139 offices across 18 states
- Insurance distribution is a large, fragmented market that has proved highly resilient
- FRP has seen strong growth under Warburg Pincus' ownership; Partners Group's future value creation plan will focus on expanding into new geographies
Partners Group, a leading global private markets firm, has, on behalf of its clients, agreed to acquire a controlling stake in Foundation Risk Partners ("FRP" or "the Company"), a specialist insurance broker in the US, from Warburg Pincus. FRP's management will maintain a substantial stake in the business while Warburg Pincus will retain a meaningful minority position.
Headquartered in Daytona Beach, Florida, FRP assists businesses and private individuals in navigating the complex US insurance landscape. The Company's areas of expertise include commercial insurance, employee benefits, personal insurance, and risk management services. FRP helps clients, which include small to mid-sized businesses and high net worth individuals, evaluate risks, secure appropriate coverage, ensure competitive pricing, and manage claims. It has a footprint of 139 offices across 18 states, with a primary focus in Florida, New Jersey, New York, and California. The Company generates revenues from fees on the initial placement and the recurring annual renewal of insurance policies, leading to highly predictable cash flows. Insurance brokerage is a large market that has proven highly resilient through economic cycles as insurance coverage is a non-discretionary expense. The market further benefits from several transformative trends including the emergence of new risks, such as cyber and social media exposure; the increase in the cost and frequency of litigation; and an evolving regulatory environment that emphasizes the need for insurance advice and coverage.
Partners Group will work with management to drive further growth at FRP and expand its presence across the US. Key value creation initiatives will include refining the acquisition strategy and expanding M&A, introducing the product suite in new geographies, investing in technology, and further leveraging the operating model.
Joel Schwartz, Partner, Co-Head Private Equity Services, Partners Group, says: "FRP provides us with access to the growing insurance brokerage market in the US, which benefits from stable non-discretionary demand and favorable tailwinds. We have been tracking this market for several years and were attracted to FRP's diversified service offering and client base, as well as the transformational platform-building opportunity it represents. We look forward to working with FRP's very experienced management team on implementing the value creation plan."
Charlie Lydecker, Chief Executive Officer, Foundation Risk Partners, comments: "At FRP, we pride ourselves on our industry experience, client commitment, and market leading innovation. Since 2017, we have grown significantly, deepened our expertise across all product lines, and enhanced our client offering. As we look to grow and break into new markets, we believe Partners Group's track record of building leading platforms, as well as its deep resources, will be highly valuable to the next phase of our growth."
Jeff Stein, Managing Director, Warburg Pincus, adds: "Since its launch over five years ago, we have seen FRP experience a transformative period of organic and acquisitive growth, while building out robust capabilities in technology integration. We are proud of our partnership with Charlie and the Foundation Risk Partners team to-date and believe the Company is well-positioned for continued success as a leading insurance agency. We are excited to work with Partners Group moving forward as the Company enters this next phase of growth."
Partners Group was advised by Morgan Stanley & Co. LLC as its financial advisor and Ropes & Gray LLP as legal counsel. Warburg Pincus and Foundation Risk Partners were advised by Barclays, MarshBerry, Kirkland & Ellis LLP, Jamieson Corporate Finance, and Peter W. Klein, Attorney at Law.