PCF INSURANCE SERVICES SECURES $400 MILLION IN INCREMENTAL FINANCING AS PART OF NEW DELAYED DRAW TERM LOAN

Rhea-AI Summary

PCF Insurance Services secures $400 million in incremental financing led by Blue Owl, reducing debt margin by 50 basis points. The financing was oversubscribed and upsized due to strong demand. The deal includes a delayed draw term loan to support M&A activities. PCF Insurance aims to accelerate its growth strategy through acquisitions and shared services offerings.

Positive

• PCF Insurance secures $400 million in incremental debt financing led by Blue Owl.
• Debt margin reduced by 50 basis points, resulting in significant annual interest savings.
• Financing oversubscribed and upsized to $400 million due to strong demand.
• Delayed draw term loan included to support M&A activities.
• PCF Insurance aims to accelerate growth through acquisitions and shared services offerings.

Negative

• None.

Insights

Financial Analyst

Securing a substantial $400 million in incremental financing indicates a strong interest in PCF Insurance's growth potential. The oversubscription, initially set at $300 million, reflects an investor confidence that's noteworthy. The reduction in the margin by 50 basis points is also significant, not just a minor adjustment. It denotes a better interest rate, potentially saving the company millions in interest payments annually.

Looking at the broader implications, such a move could suggest PCF Insurance is in a robust position to steer through its growth and M&A plans. However, investors should note the level of debt being undertaken. While debt can accelerate growth, it also increases financial risk, especially if the acquisitions do not yield the expected synergies or if the market conditions change adversely.

M&A Expert

The use of a delayed draw term loan is a strategic maneuver for supporting M&A activities. It implies that PCF Insurance seeks flexibility in capital for potential acquisitions without immediately impacting their cash flow. The term 'pari passu' suggests that this new debt will have the same seniority as existing debt, which can be appealing to investors looking for assurance regarding the company's debt management.

Given PCF Insurance's strategic decision to ramp up M&A after a slow 2023, investors should look for potential targets that could provide synergistic value. However, managing the integration of new acquisitions will be critical to realizing their full potential and mitigating integration risks. It will be vital to monitor how effectively the company deploys this capital in enhancing shareholder value through strategic acquisitions.

LEHI, Utah, April 24, 2024 /PRNewswire/ -- PCF Insurance Services, a top 20 U.S. insurance brokerage, has closed $400 million in incremental debt financing led by Blue Owl, a global alternative asset manager that acted as lead arranger and administrative agent. The financing was materially oversubscribed and was upsized from $300 million to $400 million in response to strong demand from new and existing lenders. In addition, the company reduced the margin on the majority of its debt by 50 basis points, which will represent a significant annual savings in ongoing interest expense.

"This most recent financing is a testament to the strength of our team and commitment to growth and will enable us to further accelerate our M&A strategy," said Felix Morgan, Chief Executive Officer for PCF Insurance. "As part of PCF's long-term commitment to growth, we seek to identify and acquire businesses that will benefit from strong shareholder value and robust shared services offerings along with access to collaborative, industry-leading professionals."

The deal includes a delayed draw term loan to support M&A that will be pari passu and mature concurrently with the company's existing secured credit facilities. PCF Insurance last accessed the capital markets in July 2023, when it secured $400 million in incremental debt financing, which was also led by Blue Owl, and in February 2023 with a $500 million preferred equity investment co-led by Carlyle's Global Credit platform and private equity firm HGGC. Blue Owl and Crescent Capital, both of which have existing minority equity stakes in the business, also participated in the preferred equity transaction.

"Felix and the management team at PCF Insurance Services continue to successfully execute on their growth strategy, and we are pleased to provide the company with additional capital to fund their long-term plan," said Lukas Spiss, Managing Director at Blue Owl Capital. "We look forward to seeing what they can accomplish over the coming years and are excited to continue our partnership."  

PCF Insurance was recognized on the Inc. 5000 list of the fastest-growing private companies in America for the second consecutive year in 2023. PCF Insurance leverages the industry knowledge and experience of its more than 4,000 employees across 40 states to provide its highly diversified suite of risk management, benefits design, and insurance brokerage services. PCF Insurance strategically slowed M&A efforts in 2023. In 2024, the company has accelerated both M&A and organic strategies to drive growth.

About PCF Insurance Services
A top 20 U.S. insurance brokerage headquartered in Lehi, Utah, PCF Insurance Services of the West, LLC offers a broad array of commercial and personal lines, life and health, employee benefits, and workers' compensation solutions. PCF Insurance's operating model and entrepreneurial environment support its tremendous growth profile, offering its businesses alignment through equity ownership, enhanced coverage solutions and capabilities for clients, and shared-services resources. With more than 4,000 employees across the U.S., PCF Insurance is a notable leader in the insurance space, ranking #20 on Business Insurance's 2023 Top 100 Brokers and #12 on Insurance Journal's 2023 Top Property/Casualty Agencies. Visit pcfins.com for more information. 

About Blue Owl
Blue Owl (NYSE: OWL) is a leading asset manager that is redefining alternatives. With over $165 billion in assets under management as of December 31, 2023, Blue Owl invests across three multi-strategy platforms: Credit, GP Strategic Capital, and Real Estate. Anchored by a strong permanent capital base, Blue Owl provides businesses with private capital solutions to drive long-term growth and offer institutional and individual investors differentiated alternative investment opportunities that aim to deliver strong performance, risk-adjusted returns, and capital preservation. Together with over 685 experienced professionals globally, Blue Owl brings the vision and discipline to create the exceptional. To learn more, visit www.blueowl.com. 

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SOURCE PCF Insurance Services

FAQ

What amount of financing did PCF Insurance Services secure?

PCF Insurance Services secured $400 million in incremental debt financing.

Who led the financing for PCF Insurance Services?

Blue Owl, a global alternative asset manager, led the financing for PCF Insurance Services.

What was the reason for upsizing the financing from $300 million to $400 million?

The financing was upsized due to strong demand from new and existing lenders.

What is the purpose of the delayed draw term loan included in the deal?

The delayed draw term loan is intended to support M&A activities.

How does PCF Insurance Services plan to accelerate its growth strategy?

PCF Insurance Services aims to accelerate its growth strategy through acquisitions and shared services offerings.