AUB Announces Share Retail Entitlement Offer At $19.50 Per New Share

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AUB Announces Share Retail Entitlement Offer At $19.50 Per New Share

  • Institutional component of $350 M Offer significantly oversubscribed
  • Proceeds applied to the acquisition of a leading Lloyds wholesale broker with a global distribution network
  • Acquisition translates to 30 percent underlying EPS accretion, assuming anticipated synergies and margin enhancement achieved in CY22
  • 50-70 percent dividend payout ratio on new and existing shares is supportive of share price.

AUB Group Limited (‘AUB‘ or the ‘Group‘) is an ASX200 company comprising insurance brokers and underwriting agencies operating from 500 locations across Australia and New Zealand, employing 3000 people, servicing 850,000 clients and writing $4 billion in insurance premiums annually. The Group’s insurance broking business core focus is Small and Medium Enterprise (SME) businesses.   The Group has recently expanded into the UK insurance market with the purchase of the sixth largest wholesale broker in the Lloyd’s marketplace.

 AUB adopts an equity-based model where the owners remain directly responsible for the day-to-day operations. Under the model, each individual business can leverage the scale, infrastructure and operational capability of the Group in servicing client needs.

New Share Retail Entitlement Offer at $19.50

Shareholders have until 27 May to apply for New Shares under the $47 million Retail Entitlement Offer announced today. Shareholders are entitled to 1 share for every 5.2 shares held at $19.50 per New Share. The Offer is part of a $350 million non-renounceable capital raising. The Entitlement cannot be sold and is not transferable. Shares not taken up by shareholders will be taken up by the Underwriter, in which case shareholders will receive no value for their lapsed entitlement. Strong demand from Institutions, including demand for additional entitlements, has led to the Institutional component of the Offer being significantly oversubscribed.

The New Shares rank equally with existing shares and will be allotted on 3 June, before trading in the New Shares commences on 6 June.

Purpose of Equity Raising

The $350 million total equity raising, together with a $675 million new debt facility, will be applied to the acquisition of Tysers, a leading Lloyds wholesale broker for A$880 million. London based Tysers is the sixth largest wholesale broker in the Lloyd’s marketplace, with a global distribution network, writing A$3.6 billion in Gross Written Premium annually.

The acquisition is a quantum leap for AUB that will drive scale and facilitate new business, with enhanced margins. The acquisition is highly synergistic with $25 million in margin enhancement and cost synergies expected to be realised within 18 months of completion. This translates to an estimated 30 percent underlying Earnings Per Share accretion on a pro forma basis in the 2022 calendar year, assuming a full run rate of anticipated synergies.

Looking Ahead

The strategic rationale for the purchase of Lloyds of London wholesale insurance broker, Tysers, appears soundly based for the Australian based insurance broker. The acquisition has been enthusiastically supported by new and existing Intuitional investors. The acquisition supports AUB’s already strong competitive market position. AUB will now broaden its range of customised, innovative, differentiated, and exclusive products to its existing broker and agency network and establish new agencies and secure Lloyd’s binders. The acquisition will also assist AUB clients with international placement needs.

AUB recently affirmed its FY22 earnings guidance of Underlying Net Profit After Tax of between $72 and $74 million, an increase of 19-22 percent over FY21 continuing operations.

Targeting a dividend pay-out ratio of 50-70 percent and paying fully franked dividends on new and existing shares, should see the AUB share price well supported in the period ahead.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at

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