BP Marsh & Partners

Niche venture capitalist BP Marsh & Partners, the backer of emerging financial services businesses, has announced its first investment sale since floating on AIM at 140p in 2006.

Principal, a profitable provider of discretionary fund management advice, is being sold to South African insurance and financial services group Sanlam, with B.P Marsh’s share of the consideration being £7.4m (including preferred dividend rights). This represents a lucrative £4.6m gain on the £2.8m invested since 1999 and an investment multiple of 2.64 times the group’s equity investment.

Chaired by eloquent OBE Brian Marsh, formerly an insurance broking and underwriting mover and shaker in Lloyd’s, BP Marsh typically invests up to £2.5m for minority stakes of between 15% and 45%. The firm, now with ten companies in its portfolio including financial adviser LEBC, insurance group Hyperion and JMD Specialist Insurance, prides itself on knowledge of the financial services sphere and its flexible approach to exits.

It recently invested a further €4m (£2.97m), with a ‘highly respected’ private Spanish investor putting up the same amount, in Summa, a Madrid-based buyer of regional Spanish brokerages. In tandem with the conversion of €1m of outstanding loans, its share of Summa, a business boasting great growth prospects, increased from 35% to almost 49%.

BP Marsh is unarguably undervalued, having increased net assets in its latest 31 July balance sheet date to £50.6m, a 12.8% rise year on year to the equivalent of 172.9p per share. Though the stock is decidedly illiquid, the heavy discount to assets looks illogical.

Growth Company Investor is the UK’s leading authority on small-cap and AIM companies. You can gain immediate access to all the recent share recommendations with no obligation, with a free 30-day trial. Click here to join today.