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Caisse de dépôt et placement du Québec to buy stake in commercial brokerage USI from Onex


March 17, 2017   by Canadian Underwriter


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Toronto-based Onex Corp. is selling its stake in one of the world’s largest commercial brokerages, USI Insurance Services LLC, to Caisse de dépôt et placement du Québec and other buyers.

Valhalla, N.Y.-based USI placed 11th worldwide in an earlier ranking by Finaccord Ltd., of commercial brokerages. USI has 140 offices in the United States, placing coverage for property, liability, auto, excess and environmental, among others.

Montreal-based Caisse de dépôt et placement du Québec manages funds, mainly for pension and insurance plans.

Onex said Friday that Onex and its affiliates agreed to sell USI to an affiliate of New York-based private equity firm Kohlberg Kravis Roberts and Co. LP and Caisse de dépôt et placement du Québec “for an enterprise value of $4.3 billion.” The sale, which is subject to regulatory approval and other conditions, is expected to close in Q2. In its Q4 2016 financial report, Onex said it owned 89% of USI.

KKR and CDPQ will be “partners with equal ownership” of USI, CDPQ stated.

New York City-based KKR said Friday that “KKR and CDPQ, along with USI employees,” agreed to jointly acquire USI.

“CDPQ and KKR are co-leading this investment and leveraging their respective expertise in the sector to support USI’s world-class management as it pursues its strategic plan for long-term growth,” stated Christian Puscasiu, co-head, direct investments, private equity at CDPQ, in a release. “USI operates in a resilient sector characterized by stable, long-term returns and serves small and medium-sized businesses, which are the cornerstone of the U.S. economy.”

Upon completion of the transaction, the Onex Group will have received proceeds of approximately (US) $2.1 billion, including a prior distribution of $181 million in 2015,” Onex said March 17 in a release.

In a 2014 report- Global Insurance Broking: A Strategic Review of the World’s Top 150 Commercial Non-Life Insurance Brokers – London-based Finaccord ranked the top 150 brokers by estimates of commercial non-life broking revenues in 2013. USI placed 11th. Finaccord’s estimates excluded revenues from personal lines, employee benefits, wholesale insurance and reinsurance. The top three were Aon, Marsh and Willis. Eight brokerages based in Canada made the top 150. Chicago-based Hub International Ltd. – whose Canadian operations include HKMB Hub and Totten Insurance Group – placed seventh.

Other firms in which Onex has an equity investment include claims services firm York Risk Services Group of Parsippany, N.J. and Toronto-based electronics equipment maker Celestica, which was spun off from IBM Corp. in 1996.

Onex was founded in 1983 by Gerry Schwartz, currently chairman, president and CEO.