NEW YORK - Ambac Financial Group, Inc. (NYSE: NYSE:AMBC), a specialty insurance holding company, has entered into a definitive agreement to purchase a 60% controlling interest in Beat Capital Partners Limited, a UK-based insurance underwriting and MGA platform. The transaction, valued at approximately $282 million, is anticipated to close in the third quarter of 2024, pending regulatory approvals.
The deal will see Ambac acquire the majority stake from current shareholders, including Bain Capital and Beat's management team, which will each retain around 20% equity interest. The acquisition cost will be partially paid in Ambac common stock, up to $40 million, with the balance in cash, subject to adjustments at closing.
Claude LeBlanc, Ambac's President and CEO, described the acquisition as a monumental step that aligns with their vision of becoming a premier destination for MGAs and significantly hastens their progress towards a three-year target of generating over $100 million in annual EBITDA.
John Cavanagh, Partner and Chairman of Beat, expressed that the partnership with Ambac represents a transformational move for Beat, creating a powerful global platform for MGAs and underwriting franchises. Cavanagh, a seasoned industry professional, will continue to lead Beat alongside the senior management team.
Beat, since its inception in 2017, has launched 13 Underwriting Franchises and MGAs, generating $533 million in gross premiums and approximately $17 million in EBITDA in 2023. With Beat's addition, Ambac's specialty property and casualty platform is projected to yield over $1.4 billion in gross written premiums on a combined basis for the full year 2024.
Ambac's existing specialty P&C platform includes Everspan Group, with carriers rated A- by AM Best, and Cirrata Group, housing top-tier MGAs and a wholesale broker. UBS Investment Bank and Debevoise & Plimpton LLP advised Ambac on the financial and legal aspects, respectively, while Evercore and RPC (NYSE:RES) did so for Beat and Bain Capital.
A conference call with Ambac's and Beat's senior management will be held today at 8:30 a.m. ET to discuss the acquisition further. This information is based on a press release statement.
InvestingPro Insights
As Ambac Financial Group (NYSE: AMBC) gears up for its strategic acquisition of Beat Capital Partners Limited, the company's financial health and market performance become focal points for investors.
According to InvestingPro data, Ambac boasts a market capitalization of $779.23 million, with a price-to-earnings (P/E) ratio of 12.67, reflecting investor expectations of future earnings. Notably, the company's revenue has shown robust growth in the last twelve months as of Q1 2024, with an impressive 14.81% increase, and an even more striking quarterly revenue growth rate of 68.33% in Q1 2024.
InvestingPro Tips highlight several key aspects of Ambac's financial journey. The company has demonstrated a strong return over the last month, with a 17.45% price total return, which could signal confidence from the market in its operational strategy and future outlook.
Moreover, analysts predict the company will be profitable this year, a tip that aligns with Ambac's own projections of significant EBITDA growth post-acquisition. It's worth noting, however, that the company's short-term obligations currently exceed its liquid assets, which may require careful financial management especially in the context of the upcoming transaction.
For investors seeking a deeper dive into Ambac's financial landscape and future prospects, InvestingPro offers a wealth of additional insights. With the current information, there are 6 more InvestingPro Tips available for Ambac at https://www.investing.com/pro/AMBC. These tips could provide valuable guidance for making informed investment decisions. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further expert analysis and market data.
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