Private equity group Carlyle has struck a $6.7 billion (£5.14 billion) deal to buy claims management giant Sedgwick.
Two Carlyle buyout funds, one of which is worth $18.5 billion (£14.2 billion), will provide the equity capital for the deal, in exchange for a majority stake in Sedgwick, which handles more than 3.6 million claims annually, and is responsible for claim payments totaling more than $19.5 billion (£14.95 billion).
Current majority shareholder KKR will fully exit its position following the transaction. Funds managed by Stone Point Capital and Caisse de dépôt et placement du Québec, together with Sedgwick management, will remain minority investors.
KKR bought Sedgwick from two other private equity groups in 2014, paying $2.4 billion (£1.84 billion).
Sedgwick has been buying up companies itself since then. Earlier this year, the claims management company acquired loss adjuster Cunningham Lindsey.
“At Sedgwick, taking care of people is at the heart of everything we do, and I am proud that The Carlyle Group appreciates the value our colleagues create when they put our caring counts philosophy into practice,” said Dave North, president and CEO of Sedgwick.
“We are humbled by the confidence they have shown in our business model, and we look forward to partnering with Carlyle on developing and delivering innovative solutions for our clients around the world. We are grateful for the strong and value-added partnership with KKR over the last handful of years.”
Stephen Wise, managing director and global head of healthcare for Carlyle, said: “Dave North and Sedgwick’s world-class management team have built the company into an industry leader over the last two decades. We are excited to collaborate with Sedgwick, which has distinguished itself by constantly improving the claims management and loss adjusting process to the benefit of all key stakeholders, including its colleagues, customers, insurance companies and brokers.”
John Redett, co-head of global financial services for Carlyle, added: “We are pleased to partner with the exceptional management team and highly talented colleagues of Sedgwick. We look forward to participating in Sedgwick’s next chapter of growth and innovation and working with the company as it builds out its global platform to meet the increasingly complex needs of its clients around the world, while leveraging the One Carlyle network.”
The parties are working to close the deal later this year, subject to regulatory approvals.