Discusssions 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.
1Life Healthcare operates a membership-based primary care platform. The company develops a healthcare membership model based on direct consumer enrollment, as well as employer sponsorship. The company also provides medical services in-office and virtually. As of September 30, 2019, the company had approximately 397,000 members in 9 markets in the United States; 6,000 enterprise clients; and health network partnerships. The company serves consumers, employers, providers, and health networks under the One Medical brand name.
Randall & Quilter Investment Holdings is a holding and investment company. Through its subsidiaries, Co. acts as owners and managers of insurance companies, live and in run-off, as underwriting managers for insurers, as participators and managers of Lloyd's syndicates, as purchasers of insurance receivables and as service providers to the non-life insurance market. Co.'s has 3 segments: insurance investments which acquires and assumes legacy portfolios, insurance debt and provides capital support to Lloyd's syndicates; insurance services which provides insurance related services; and underwriting management, which provides management to Lloyd's syndicates and operates underwriting entities.
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