Canada’s Caisse de dépôt et placement du Québec (CDPQ) said it is making a $500-million investment in Sedgwick, a leading insurance claims services provider in the United States. CDPQ will hold a significant minority interest in Sedgwick, in partnership with existing shareholders KKR & Co. LP (NYSE: KKR), the majority shareholder, Stone Point Capital LLC, and members of Sedgwick’s management.
In March 2014, New York-based private equity firm KKR, together with Sedgwick management, acquired a majority ownership stake of Memphis, Tenn.-based Sedgwick from private equity firms San Francisco-based Hellman & Friedman LLC and Greenwich, Conn.-based Stone Point Capital, for $2.4 billion. Stone Point retained a minority stake.
Sedgwick Claims Management Services Inc. is a leading global provider of technology-enabled risk and benefits solutions, with 14,000 employees at 275 offices in the U.S., Canada, U.K. and Ireland. The company serves people and organizations by delivering cost-effective claims, productivity, managed care, risk consulting and other services.
“This investment, carried out alongside quality partners such as KKR and Stone Point, and under the leadership of Christian Puscasiu, head of Americas, Private Equity, is consistent with CDPQ’s strategy to invest directly in companies that stand out in their market,” said Roland Lescure, chief investment officer of CDPQ.
“Sedgwick is operating in a promising market. The company has performed remarkably over time and its management has a solid track record. We particularly appreciate how resilient the company has been throughout the various cycles and its stable, long-term growth strategy, which is perfectly aligned with CDPQ’s investor profile,” Lescure added.
CDPQ is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As of June 30, 2016, it held $254.9 billion in net assets. As one of Canada’s leading institutional fund managers, CDPQ invests globally in major financial markets, private equity, infrastructure and real estate.
“We are glad to welcome CDPQ as partners who share our confidence in Sedgwick’s future and in management’s ability to continue their strong track record of industry-leading innovation”, said Tagar Olson, member and head of Financial Services investments at KKR.
KKR is a leading global investment firm with $131 billion in assets under management as of June 30, 2016, across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds.
Earlier this year, KKR’s capital markets arm arranged a $325 million dividend recapitalization loan for Sedgwick, which allowed the company to make a dividend distribution to its shareholders, including KKR, marking the first large dividend recap deal in 2016.
“We are delighted that CDPQ will be joining KKR and Stone Point as investors in Sedgwick. We have known and respected the team at CDPQ for many years, and look forward to working with them during the next phase of Sedgwick’s growth”, said Jim Carey, senior principal of Stone Point Capital.
Stone Point Capital is a financial services-focused private equity firm, which has raised and managed six private equity funds, the Trident Funds, with aggregate committed capital of approximately $13 billion.
Photo: Henry R. Kravis, Co-Chairman and Co-CEO of KKR & Co. (Bloomberg News/Adrian Moser)