Novacap Financial Services, the main investor in managing general agent Revau Advanced Underwriting, has found new investors to support Revau’s continued expansion in the North American market. The formula adopted is that of a continuation vehicle.
The consortium that will take over through this continuation vehicle is made up of funds managed by Northleaf Capital Partners, Export Development Canada (EDC), and the Fonds de solidarité FTQ.
“This new vehicle gives us access to more capital, and not just Canadian capital,” said Jean-François Raymond, President of Revau, in an interview with the Insurance Portal from Texas, where he has been based since last June.
The fund that was used to invest in Revau in 2020 (at the time, Groupassur) has a lifespan of eight years, he explains. The sale of the stake in Revau was planned for 2027.
But the recent expansion announced in the United States, with the acquisition of two managing general agents (MGAs) based in the Dallas metropolitan area, changed the situation. “We had to reset the clock,” says Raymond.
Novacap proposed the continuation vehicle formula. This is a first for its financial services activities, but the investment firm has already used it in three other companies.
Investors in the new consortium are investing directly in Revau through a limited partnership (LP). Revau says that its limited partners now include several institutional investors, including Manulife Investment Management.
“The transaction offered existing Novacap limited partners the option to receive liquidity or rollover while providing Revau with access to additional capital,” Novacap and Revau said in their joint press release issued on Sept. 3.
More time
Novacap has thus contributed to the creation of a new fund that is entirely dedicated to Revau's growth. This fund has a five-year term, with possible extensions. “This gives us momentum and more years ahead of us to develop Revau in the United States,” underlines Raymond.
The search for a new buyer has therefore been postponed for a few years. “That's how private equity financing works. You invest, then you sell. But in the meantime, we continue with new partners and more capital. And that facilitates our growth through acquisitions in the United States,” he adds.
Northleaf is the dominant investor in the limited partnership. According to Raymond, the presence of EDC and the Fonds de solidarité FTQ in a property and casualty insurance company is unusual. “I've met with some investors, but there are people from all over the world who are part of the continuation vehicle,” he says.
Novacap remains an investor, and the majority of the limited partnership investors are Canadian. If Revau increases its premium volume to over $2 billion as planned, “buyers for companies of this size are more likely to be found in the United States,” Raymond points out.
As Revau is a major MGA in Canada, the company could become an attractive acquisition for a US company looking to do business in Canada as well. “Currently, we are doing the opposite by establishing ourselves in the United States, which is a little more unusual.”
In five years
In five years, Revau will be up for sale again. According to Raymond, it could be acquired by another private fund, large institutional investors, or a competitor. But he still aims to remain independent from the world's major insurance companies.
Could it become a public company through an initial public offering (IPO)? “When Novacap invested in us, we did everything we needed to do to prepare for an IPO, even though we didn't want to do it,” he says.
He notes that the stock markets are not very enthusiastic about insurance company stocks. “Shareholders like their investments and hold on to them for a long time. There isn't much trading. In the public market, when your shares aren't trading much, they don't increase in value,” he says. This can be seen in large Canadian life and health insurance companies that are launching share buyback programs.
As a result, the few examples of insurance-related IPOs have produced lower-than-expected valuations, according to discussions Raymond has had with investors he has met through Novacap. “In five years, we'll see. We'll be ready for that. We have everything in place to attract investors,” he says.
A coincidence
In November 2023, the Insurance Portal reported an investment made by Novacap in the actuarial consulting firm Lewis & Ellis, based in Dallas. Jean-François Raymond acknowledges that he met Chabe Cadick, the firm's CEO, through Novacap.
However, he points out that there is absolutely no connection between this company and the two MGAs—Brazos Specialty Risk Insurance and Twenty Mile Insurance Services—acquired in May 2025, which are based in the same metropolitan area.
“Yes, Lewis & Ellis are among our consulting actuaries, as we use this type of service extensively in the U.S. market, but it's purely coincidental. They're not even in the property and casualty insurance business,” he says.
