Brightside launches £35m acquisitions

18/05/2010 Robert Tyerman

Arron Banks, director and shareholder of the ambitious and acquisitive Brightside

Insurance broker Brightside Group is raising £9 million at 25p to help buy two companies from its founding shareholders.

The Bristol-based company, a leader in van insurance and eager to expand in other fields, is to buy the policy books, new business and policy renewal rights of insurance brands eCar and eBike for an initial £15.5 million from owners including 20 per cent Brightside shareholder and director Arron Banks and chief executive Paul Chase-Gardener. A further £19.1 million will become payable if the two brands meet certain performance targets.

AIM-quoted Brightside explains the present growth prospects of eCar, which chalked up £64 million gross written premiums last year, and of eBike, which achieved £5.8 million, have been limited by the underwriting capacity of their traditional underwriter Southern Rock Insurance, a company owned by Banks, Chase-Gardener and others. Brightside has therefore been working with major insurers Aviva, Liverpool Victoria, Axa, Groupama and Fortis to form a panel to offer policies to eCar and it now claims to be confident such a panel will be established to enable eCar to grow ‘without being overly reliant on the underwriting capacity and pricing decisions of a single insurer’.

If this happens, the eCar and eBike takeovers could be good news not only for Banks, Chase-Gardener and other vendors but also for Brightside itself. The deal should also help allay City concerns about the transparency of the company’s operations.

Highlighted by Growth Company Investor at 21.5p last September, Brightside shares now stand at 28p, valuing the company at £117.3 million. They should make progress over the medium term.