Investment Completion - Tempcover Ltd
2 January 2018
UK’s leading temporary insurance provider has growth covered after completing £13.3m MBO
- Connection Capital clients invest £7.5m into multi award-winning niche insurer
- Investment is Connection Capital’s 6th private equity deal in 12 months
The UK’s leading online temporary insurance platform, Tempcover Ltd, is ready to capitalise on further growth opportunities, having completed a £13.3m management buy-out (MBO) backed by £7.5m from Connection Capital, the specialist private client investment business alongside a £5.75m debt package from Santander UK’s Growth Capital team.
Connection Capital says the opportunity to invest in this multi-award winning, highly profitable niche insurance specialist, which offers multiple avenues to grow and is driven by an impressive management team, was highly attractive to its private investor clients.
Tempcover specialises in the provision of temporary insurance cover, typically providing short term policies of 1-28 days available through customers portals, UK insurance brokers and affiliate partners. It offers simple, cost-effective insurance delivered in minutes, to customers requiring short-term covers, for example when buying or borrowing a car and also focuses on innovative products in other new areas, such as learner-drivers, students, Ex Pats and home insurance.
Established in 2006, the company now has an estimated 60% market share in its niche, writing over 360,000 policies last year. In 2017 it won the Queen’s Award for Enterprise in the Innovation category, and was also Highly Commended in the Scheme Broker of the Year at the Broker Awards.
Its bespoke, in-house built IT platform and relationships with a varied panel of underwriters allow it to offer highly flexible packages of cover and a far broader range of insurable products than other providers in the market.
A number of factors are contributing to the continuing growth of the temporary insurance market, such as the increasing removal of third party cover in most comprehensive car insurance policies, the growth of the gig economy and the evolution of more flexible sharing models.
Tempcover is well-placed to capitalise on this, with a highly scalable model, which allows it to deliver temporary cover in any timeframe and any volume. The company has the potential to leverage its digital platform and marketing expertise into new markets relatively easily.
Connection Capital has also helped add to Tempcover’s board expertise by introducing Peter Barrett as a new Non Executive Chairman and Christian Young as a Non Executive Director. Both bring significant personal lines insurance industry experience, are Connection Capital clients and have invested in the MBO.
The deal is Connection Capital’s sixth private equity transaction this year, making it one of the most active lower-mid market private equity investors in the UK and demonstrating strong appetite from its clients to participate in this asset class as part of a balanced portfolio.
Miles Otway, Partner at Connection Capital said: “Tempcover is a market leader and has won many accolades for its innovation and its service – and with good reason. It’s a dynamic pioneer in its niche with real ambition and capacity to capitalise on growth opportunities.”
“We are delighted to back Alan Inskip and his team and to have introduced a new value-adding Chairman and NXD from our network, the ingredients are all there to accelerate growth. We believe that this deal represents a strong investment proposition, and our clients clearly agree.”
Alan Inskip, CEO of Tempcover said: “Tempcover has been trail-blazing the specialist temporary insurance market for over a decade, so the MBO is a real milestone in our evolution. We have exciting plans to grow the business significantly, which will see us develop our capability into existing and new areas of temporary insurance. Connection Capital’s investment and expertise will undoubtedly be invaluable as we strengthen our market position and ramp up our offering.”
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