Sedgwick announces strategic partnership with Altas Partners

Rhea-AI Summary

Sedgwick, a global leader in claims management, has announced a strategic partnership with Altas Partners. This investment values Sedgwick at approximately $13.2 billion, a significant increase from its $6.7 billion valuation in 2018 when Carlyle (NASDAQ: CG) made its initial investment. Altas has committed to invest $1 billion in equity as part of the transaction.

Carlyle will maintain its control position, with Stone Point Capital also remaining as an investor. The partnership aims to foster Sedgwick's continued growth, expand its global footprint, and enhance its service capabilities. In 2023, Sedgwick handled over 8 million claims with fiduciary responsibility for claim payments totaling more than $33 billion. The transaction is expected to close in Q4 2024, subject to customary conditions.

Positive

• Strategic investment from Altas Partners, valuing Sedgwick at $13.2 billion
• Carlyle maintains control position, with Stone Point Capital remaining as investor
• Altas Partners commits $1 billion in equity investment
• Sedgwick handled over 8 million claims in 2023
• Fiduciary responsibility for $33 billion in claim payments in 2023

Negative

• None.

Insights

Financial Analyst

This strategic investment from Altas Partners marks a significant milestone for Sedgwick, valuing the company at $13.2 billion - nearly doubling its $6.7 billion valuation from 2018. Altas' $1 billion equity commitment underscores confidence in Sedgwick's growth potential.

The deal structure, maintaining Carlyle's control position while bringing in new capital, suggests a balanced approach to expansion. With $33 billion in claim payments handled in 2023, Sedgwick's scale in the claims management sector is impressive. This investment could fuel further technological innovation and global expansion, potentially enhancing Sedgwick's market position and profitability.

Market Research Analyst

This partnership signals robust growth in the global claims management sector. Sedgwick's handling of over 8 million claims annually indicates substantial market demand. The involvement of major private equity firms - Carlyle, Stone Point and now Altas - suggests strong confidence in the industry's future.

The transaction's structure, maintaining Sedgwick as an independent entity, allows for agile decision-making and continued focus on core competencies. This could be important in a rapidly evolving risk management landscape. The emphasis on data science and technological innovation aligns with broader industry trends, potentially positioning Sedgwick to capture emerging opportunities in AI-driven claims processing and risk assessment.

Legal Expert

The transaction's structure raises interesting regulatory considerations. With a $13.2 billion enterprise value, this deal likely requires antitrust scrutiny. The expected closing in Q4 2024 suggests confidence in regulatory approval, but potential hurdles can't be ruled out.

Sedgwick's role in handling $33 billion in claim payments annually underscores the fiduciary responsibilities at stake. As the company expands, ensuring robust compliance frameworks will be crucial. The continued involvement of existing investors alongside Altas could provide stability during this transition, potentially mitigating legal and operational risks associated with ownership changes in such a sensitive industry.

Altas Partners joins Carlyle and Stone Point Capital as strategic investors Investment will foster continued growth of global claims management provider

MEMPHIS, Tenn., Sept. 12, 2024 /PRNewswire/ -- Sedgwick, a leading global provider of claims management, loss adjusting and technology-enabled business solutions, announced a strategic investment from Altas Partners ("Altas"), a North American private equity firm. Current investors, including funds managed by global investment firm Carlyle (NASDAQ: CG) and by Stone Point Capital LLC, will remain as investors and continue to make significant new investments in the business, with Carlyle maintaining its control position in partnership with the investor group and the Sedgwick management team.

This transaction implies a total enterprise value of approximately $13.2 billion, an increase from $6.7 billion when Carlyle made its initial investment in Sedgwick in 2018. Altas has committed to invest $1 billion of equity as part of the transaction and will be an active participant in the company's value creation journey going forward.

"This new partnership with Altas, and our current stakeholders, brings together a strategic vision that builds our global footprint, expands comprehensive service capabilities and enhances our business for decades to come," said Mike Arbour, CEO of Sedgwick. "Altas has a history of actively supporting companies in its portfolio, and they are very knowledgeable in the challenges our clients face in today's competitive business environment. We look forward to leveraging their expertise as informed and engaged strategic allies as we continue to lead the industry in innovation and enable clients to thrive by helping them navigate the unexpected."

"We are incredibly proud of the growth Sedgwick has achieved under our ownership," said Will McMullan, Partner and co-Head of Global Financial Services at Carlyle. "As we welcome Altas to the partnership, we are excited about the future and look forward to supporting Sedgwick's continued growth and innovation. Together, with our new and existing partners, we are committed to further enhancing Sedgwick's industry-leading capabilities and global footprint."

"Sedgwick is an exceptional company, led by a terrific team, that we have coveted for many years" said Paul Emery, Partner at Altas. "Our strategy is incredibly selective; we only invest in businesses that possess the rare combination of quality, durability and meaningful line of sight for growth. These opportunities are hard to come by, and a business like Sedgwick fits squarely within our framework. We are excited to work in close partnership with Mike Arbour and team to support the many value creation opportunities that lie ahead."

Jim Carey, Co-CEO of Stone Point said, "we have known the Sedgwick leadership team for many years and are thrilled to continue the partnership alongside Carlyle and Altas. Sedgwick is a leader in the risk, loss adjusting and claims management industries, and we look forward to supporting the company's mission in its next stage of growth."

Every year, millions of people around the world contact Sedgwick when they face an unsettling, unfamiliar or stressful event — whether a catastrophe, an accident, an absence request or claim scenario. In 2023, Sedgwick handled more than eight million claims and had fiduciary responsibility for claim payments totaling more than $33 billion. The company will remain an independent, private company with an undiluted focus on claims handling excellence, use of robust data science and technological innovation.

Morgan Stanley & Co. LLC and BofA Securities served as financial advisors and Latham & Watkins LLP served as legal advisor to Sedgwick. J.P. Morgan Securities LLC and Barclays served as financial advisors and Kirkland & Ellis served as legal advisor to Altas.

The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.

About Sedgwick 
Sedgwick is a leading global provider of claims management, loss adjusting and technology-enabled business solutions. The company provides a broad range of resources tailored to clients' specific needs in casualty, property, marine, benefits, brand protection and other lines. At Sedgwick, caring counts; through the dedication and expertise of over 33,000 colleagues across 80 countries, the company takes care of people and organizations by mitigating and reducing risks and losses, promoting health and productivity, protecting brand reputations, and containing costs that can impact performance. Sedgwick's majority shareholder is The Carlyle Group; Stone Point Capital LLC, Caisse de dépôt et placement du Québec (CDPQ), Onex and other management investors are minority shareholders. For more, see sedgwick.com.

About Altas Partners
Altas Partners is a North American private equity firm focused on selectively acquiring significant interests in high-quality businesses with meaningful growth potential. Altas focuses on services sub-sectors where it has deep expertise, seeking one or two compelling investment opportunities each year. The firm's patient investment philosophy and engaged approach to ownership distinguish Altas as a buyer of choice for many management teams and founders. The firm was founded in 2012 and operates from offices in Toronto and New York. Altas manages approximately $10 billion on behalf of leading institutional and family office investors from around the world. For more, visit altas.com.

About Carlyle
Carlyle (NASDAQ: CG) is a global investment firm with deep industry expertise that deploys private capital across its business and conducts its operations through three business segments: Global Private Equity, Global Credit and Global Investment Solutions. With $435 billion of assets under management as of June 30, 2024, Carlyle's purpose is to invest wisely and create value on behalf of its investors, portfolio companies and the communities in which we live and invest. Carlyle employs more than 2,200 people in 29 offices across four continents. Further information is available at carlyle.com. Follow Carlyle on X @OneCarlyle and LinkedIn at The Carlyle Group.

About Stone Point Capital
Stone Point is an alternative investment firm based in Greenwich, Connecticut, with more than $50 billion of assets under management. Stone Point targets investments in companies in the global financial services industry and related sectors. The firm invests in alternative asset classes, including private equity through its flagship Trident Funds and credit through commingled funds and separately managed accounts. In addition, Stone Point Capital Markets supports the firm, portfolio companies and other clients by providing dedicated financing solutions. For more information, please visit stonepoint.com.

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SOURCE Sedgwick Claims Management Services, Inc.

FAQ

What is the new valuation of Sedgwick following the Altas Partners investment?

Following the strategic investment from Altas Partners, Sedgwick's total enterprise value is approximately $13.2 billion, up from $6.7 billion when Carlyle made its initial investment in 2018.

How much equity is Altas Partners investing in Sedgwick?

Altas Partners has committed to invest $1 billion of equity as part of the transaction with Sedgwick.

Will Carlyle (CG) maintain its position in Sedgwick after the Altas Partners investment?

Yes, Carlyle (NASDAQ: CG) will maintain its control position in Sedgwick in partnership with the investor group and the Sedgwick management team.

When is the Sedgwick-Altas Partners transaction expected to close?

The transaction between Sedgwick and Altas Partners is expected to close in the fourth quarter of 2024, subject to customary closing conditions.

How many claims did Sedgwick handle in 2023?

In 2023, Sedgwick handled more than eight million claims and had fiduciary responsibility for claim payments totaling more than $33 billion.