Synex Business Performance has entered into an agreement with U.S. private equity fund BBH Capital Partners (BBHCP) whereby BBHCP will invest more than $100 million in Synex, Yan Charbonneau, Synex President and Chief Vision Officer (CVO), told Insurance Portal.
The March 2, 2022 agreement makes BBHCP a minority shareholder that will allow the group to accelerate growth, while remaining majority-owned and controlled by employees, a Synex announcement explains.
The BBH in BBH Capital Partners stands for Brown Brothers Harriman, a privately held international financial services firm founded in 1818. The New York-based firm operates three business lines: private banking, investment management and investor services.
BBH Capital Partners’ flexible investment mandate allows the firm to act as a control or non-control investor. BBHCP can also structure its investments with a combination of equity and subordinated debt securities, as needed. Its capital is used to finance a variety of transactions, including management buyouts, leveraged buyouts, growth financings, buy-and-build strategies, and acquisitions, Synex's release explains. BBH Capital Partners is part of the private banking arm of Brown Brothers Harriman, which manages more than $50 billion in assets, the announcement notes.
Saving the brokerage
Synex owns the Synex Insurance brand, which includes P&C insurance brokers, and the Synex Group Solutions brand, which includes group benefits insurance firms.
By entering into a financing agreement with Brown Brothers Harriman's private bank, Synex says it is moving towards its goal of becoming a leader in Canada’s insurance distribution market through organic growth and acquisitions.
“We have built a solid foundation at Synex. This investment partnership with BBHCP provides over a $100 million capital infusion for Synex to accelerate growth and to achieve our ambitious long-term strategic objectives. With this partnership, Synex is ensuring that it remains independent and continues its mission to save the independent brokerage industry. We are very proud of this important accomplishment and look forward to creating value and opportunities for our employees, customers and carrier partners during Synex’s next phase of growth,” Yan Charbonneau said in the announcement.
Charbonneau told Insurance Portal that mid-sized independent firms have dwindling options if they want to maintain their autonomy after they sell. “Our goal is to support independent firms, and for their leaders to continue working with us.”
Series of upcoming acquisitions
In the Insurance Journal feature on consolidation (Consolidation drives group insurance clientele values upward, page 8) published in February 2022, Synex's CEO said he would be completing several transactions in the coming months. The group has been on a consolidation drive since 2021. “2021 was a big year and 2022 will be even bigger,” Charbonneau predicted in January.
The capital injection from BBHCP will allow Synex to implement a massive acquisition campaign, Charbonneau told Insurance Portal. The Synex CEO expects to complete 16 transactions in the next two months. BBHCP sits on the board of Synex Business Performance, and brings expertise in mergers and acquisitions, Charbonneau points out.
He chose BBHCP after a speed dating session organized by Deloitte. “I met with 14 private banking companies for 25 minutes each. Seven contacted me later, and we narrowed the list down to three. We opted for BBHCP after further discussions.”
Just before press time, Synex had announced the acquisition of a P&C insurance firm in Saint John, New Brunswick: Hope Grant Insurance. The firm has a premium volume of approximately $12 million, Charbonneau said.
Synex Insurance has a premium volume of $415 million in P&C insurance, compared with $50 million for Synex Group Solutions. Fourteen firms operate under one or the other brand: AFL Solutions Collectives; A-Kan Insurance; Couture Rochette; Deslauriers Insurances; Deslauriers; Girard Tremblay and Associates Inc.; Go To Benefits; Go To Insure; Innov-Médic; Invessa; Plan B Insurance Solutions; Renaud Insurance and Risk Management Inc.; Sharp Insurance and Synex Auto Habitation.
