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By Devin Banerjee and Sean B. Pasternak
TORONTO - Onex Corp., Canada’s largest publicly traded buyout firm, agreed to buy USI Insurance Services LLC from a fund run by Goldman Sachs Group Inc. in a transaction valued at $2.3 billion.
The deal includes a $700 million equity investment by Onex Partners III fund, the Toronto-based company said Monday in a statement. Employees of the Briarcliff Manor, N.Y.-based insurance broker will remain “significant” investors in USI, which has about 100 offices in the U.S.
Private-equity firms are buying insurance-services companies for their steady cash flow and low capital needs. KKR & Co. agreed on Nov. 23 to purchase brokerage Alliant Insurance Services Inc. from Blackstone Group LP for an undisclosed amount. Last month, a group led by CVC Capital Partners Ltd. said it would acquire insurance-claim adjuster Cunningham Lindsey Group Ltd. in a deal valuing the company at as much as $1 billion including debt.
USI “is well positioned to continue to grow both organically and by building on its track record of successful acquisitions,” Robert Le Blanc, a managing director at Onex, said today in the statement. USI, which has 3,300 employees, is the ninth-largest insurance broker in the U.S., according to its website.
The buyout unit of New York-based Goldman Sachs acquired USI in 2007 in a deal valued at $1.4 billion.
Morgan Stanley advised Onex, and Kaye Scholer LLP provided legal advice. GS Capital Partners received financial advice from RBC Capital Markets LLC, and Weil Gotshal & Manges LLP acted as legal counsel. The companies expect the deal to close by the end of the year.