AGA Benefit Solutions (AGA) has a new majority shareholder, TA Associates (TA). Novacap sold its AGA stake to TA, an American private investment firm. Since its inception in 1968, TA has raised $65 billion in capital. 

AGA states it has received a significant investment from TA. TA has partnered with AGA’s management team who will remain in place and continue to be major shareholders of AGA. 

Novacap invested in AGA in 2020, using its fund dedicated to financial services. A Canadian firm with a presence in North America and more than $8 billion in assets under management, Novacap transferred its ownership stake in AGA to TA in a deal that closed on March 1, 2024. 

Registered as AGA Financial Group Inc. in the Quebec business registry, AGA's first and majority shareholder is AGA Financial Holding Inc., with Martin Papillon serving as CEO and administrator. Chantal Dufresne is the senior vice president of finance and operations, and treasurer. 

In the United States, TA has offices in: Boston, Massachusetts; Austin, Texas; and Menlo Park, California. TA is the majority shareholder of AGA Financial Holding through its holding company ABS Bidco Holdings Inc., located in Menlo Park, according to the registry. Globally, TA also does business in London, Mumbai, and Hong Kong. 

TA presents itself as a global private equity firm focused on scaling growth in profitable companies. TA says it has more than 150 investment professionals and has invested in approximately 560 companies across five target sectors: technology, healthcare, financial services, consumer, and business services. 

$100 million for expansion 

In an exclusive interview with Insurance Portal, AGA's Papillon declined to disclose the transaction's details. However, he mentioned receiving a "significant investment to continue our growth through acquisitions" from TA. "We will have access to $100 million," he revealed. 

TA thus establishes a foothold in Canada by investing in a broker that also acts as a group insurance plan third-party administrator and payor. AGA says it has eight locations across Canada and employs more than 300 people. AGA's portfolio represents more than 2,700 clients and 200,000 plan members, totaling over a billion dollars in insurance premiums and group retirement assets. 

Keen American Interest 

During the interview, AGA's CEO emphasized the appetite of American private investment firms for the group insurance distribution and technology sector. 

This is also true in the property and casualty insurance sector, where major consolidating brokers such as NFP, Westland, and Hub International fuel interest. The influx of American private capital is becoming increasingly common. Among other Canadian consolidators, Synex Business Performance welcomed a $100 million investment from the American firm BBH Capital Partners in March 2022. 

Papillon revealed that TA recently expressed its interest in investing in AGA. The firm then approached Novacap to make an offer. 

Papillon highlighted Novacap's contribution, "which allowed us to quadruple in size in three and a half years." Since 2020, AGA has made five acquisitions. "This caught the attention of another, larger private fund, which said it wanted to take over from here and continue the growth project with AGA," he shared. 

Access to the Coveted US Debt Market 

Thanks to his new shareholder, Papillon has gained access to a coveted debt market.

“TA's arrival gives us access to the American debt market.” – Martin Papillon 

"TA's arrival gives us access to the broader and more flexible American debt market. In Canada, corporate financing is dominated by a handful of banks that set their terms. The American debt market is completely different. Institutions are very eager to finance companies," he said. 

According to Papillon, the repayment period will be much shorter in the United States than in Canada. "In Canada, you need to have everything repaid within a 5 to 6-year timeframe, which is between 60 to 72 months. In the United States, I've seen loan structures where you pay back one per cent of the capital per year for seven years," he said. 

This allows almost all the capital to be redeployed for acquisitions that will eventually generate revenue flows, adds Papillon. "It opens doors."