Goldman Lands £1bn Sale Of Warranty Giant D&G

Mark Kleinman, City Editor
Goldman Lands £1bn Sale Of Warranty Giant D&G

Domestic & General (D&G), the extended warranty provider for millions of Britons' home appliances, has taken a big step towards a £1bn sale with the appointment of investment bankers to oversee a review of the company's ownership.

I have learnt that Advent International, the private equity firm which bought D&G from the public markets in 2007, this week hired Goldman Sachs, the Wall Street bank, to prepare for a sale process that will be launched later this year.

D&G is one of the largest insurers in Britain and boasts that it has more than 4 million customers, covering more than 6 million appliances, such as refrigerators, ovens and central heating units. It has warranty partnerships with prominent brand manufacturers such as Electrolux and Whirlpool.

The company was established in the unlikely surroundings of the Australian Outback in 1912, according to its website, when founder Samuel Copley set up a company providing insurance cover for sheep and cattle transportation.

D&G later became the first company to offer protection for cathode ray tubes in early black-and-white television sets, and in 1978 began offering cover for central heating. The company listed on the London Stock Exchange in 1988.

A sale valuing D&G at £1bn would see Advent reaping a handsome return on an investment which saw it pay £524m to acquire the company in the aftermath of the buyout boom in 2007. D&G made nearly £73m in pre-tax profits in the year to March 31, 2012.

Insiders said that Advent was likely to pursue a sale of the company rather than opting for a stock market listing, although they insisted that it was "keeping an open" mind about its options. The resurgent equity markets have prompted many private equity firms to rethink plans to sell companies privately because of the comparable valuations they might achieve from a public listing.

Goldman Sachs advised Advent on its takeover of D&G. The buyout group is a seasoned investor in financial services, and its plan to sell D&G comes at a busy time for corporate activity in the insurance sector, with esure, the motor specialist, set to announce its intention to float  next week.

D&G's business area has not been without controversy, with extended warranties a frequent target for the ire of consumer groups, which argue that they often provide cover of limited value for customers who can ill-afford it.

Homeserve, a rival player which competed with Advent to buy D&G in 2007, saw its fortunes suffer after becoming embroiled in a mis-selling investigation last year.

Advent declined to comment on Thursday.


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