Pemba Capital hangs up for-sale sign at insurance play Arteva Funding

afr.com:

Pemba Capital is seeking its payday at its insurance premium funding business, Arteva Funding, which it bought just over two years ago.

Pemba bankrolled the combination of the two premium funding groups in 2021. 

Street Talk understands Pemba has had boutique corporate advisor, Stanton Road Partners, shopping the business to prospective buyers for several weeks now. Prospective bidders have run due diligence on Arteva, and the field has narrowed to just a few names.

Sources said Affinity Equity Partners’ debtor and trade finance company, Scottish Pacific Group, was in the lead to buy the asset.

Should ScotPac buy Arteva as expected, it would spell a quick payday for Pemba. The middle-market private equity firm bought two independent premium funding businesses in February 2021 and combined them to create the rebadged Arteva. Premium Funding Pty Ltd was founded in 1992 in Queensland, while Principal Finance Pty Ltd set up shop in Adelaide in 1985.

At the time of Pemba’s arrival, the two businesses were on track to post about $600 million annual turnover and were growing at 15 per cent a year. It now pitches itself as the “largest independent insurance premium funding company” in the country, with plans to expand into New Zealand this year.

Put simply, Arteva lets its business or household clients split chunky lump sum insurance bills into smaller regular payments. In the background, it uses a bank debt facility to pay premiums and makes its profits on the spread. Accounts filed with the corporate regulator show Arteva made an $11.2 million after-tax profit in the 12 months to the end of June 2022, and had $13.1 million cash. Its assets included $303.3 million in funding loans.

Its keenest suitor, ScotPac, is the largest