Discussions underway to unlock value

The investment case pivots on the progress of strategic options under consideration for the two operating businesses. Specifically, these relate to the outcome of discussions with potential buyers for each entity, a process which has been simplified by their legal separation. We see potential scope to realise a net return above R&Q’s current market value.

Initial discussions focus on Accredited, R&Q’s program management business for which it confirms receipt of interest from a number of parties. Accredited is estimated to be the second largest program manager globally with operations in both the US and UK/Europe.

A possible valuation template for program managers has been provided by transactions such as Markel’s acquisition of State National (2017) and Mitsui Sumitomo’s acquisition of Transverse Group (2023), both concluded at multiples above 10x EBITDA (undisclosed, according to industry sources).

Accredited is a high potential, fast-growing business. A sum of the parts based on its sale achieving the above multiples (net of FY22 US$345m group net debt) should more than cover the current group market cap (c US$244m) and enable R&Q to separately consider various options for Gibson Re (R&Q Legacy), including a potential trade sale.