By David Bull

April 24 - (The Insurer) - GCP Capital Partners is rolling its investment in Alkeme Holdings into a continuation vehicle, with the transaction expected to value the California-based retail broker at a mid-teens multiple of EBITDA.

Senior M&A sources said the private equity firm began considering recapitalisation options for Alkeme late last year. The company has rapidly grown to become a top 35 broker with annual revenues estimated to be north of $140 million and EBITDA in excess of $50 million.

Although terms of the transaction could not be confirmed, a mid-teens multiple of EBITDA would indicate a potential $750 million-plus valuation for the business.

Following some initial discussions with potential investors to come in alongside GCP Capital Partners, sources said the New York-based backer instead moved to place the intermediary into a continuation vehicle, rather than go ahead with a recap process to bring in a new investor.

The decision is set to extend GCP Capital Partners’ investment while providing a liquidity event for some limited partners in the existing fund, with others rolling into the continuation vehicle alongside new investors.

It has not been confirmed whether the transaction has closed, but such deals to roll private equity investments into continuation vehicles can take more than six months to complete, a senior M&A source said.

ACTIVE ACQUIRER

Since launching in 2020 through the merger of seven Californian brokerages, Alkeme has been an active acquirer as well as bringing in producer talent as it has expanded its platform.

According to a press release in January announcing a deal to buy Professional Benefits Consultants, Alkeme has completed 50 acquisitions and now serves its customers from more than 40 locations in 22 states.

Last year was its most active for acquisitions, according to the latest data from Optis Partners.

In its year-end 2024 report, Optis said Alkeme completed 21 acquisitions last year, up from 12 in 2023.

Alkeme reportedly generated $114 million of revenue in 2023, up 21.3% on 2022. Even if that trajectory was only matched last year – its most active for acquisitions – revenue would have approached $140 million.

The company describes itself as a full-service insurance agency that provides businesses and individuals with an “extensive array” of commercial and personal insurance, employee and executive benefits, retirement and wealth management services.

It is led by CEO Curtis Barton, who previously founded Venture Pacific Insurance, one of the firms consolidated to form Alkeme back in 2020.

Alkeme is one of a number of companies formed in recent years by private equity sponsors through roll-ups of multiple retail agencies.

Others such deals include the December 2020 formation of Oakbridge Insurance Agency from a quartet of retail brokers with backing from Corsair Capital; the creation of Alera with backing from Genstar in 2017 through the combination of 24 member firms of the Benefit Advisors Network; and the launch of Summit Partners-backed Patriot Growth Insurance Services in 2019 through the merger of 17 independent agencies and TRUE Network Advisors.

The rationale behind GCP Capital Partners moving its investment into a continuation vehicle has not been confirmed.

Continuation vehicles – or continuation funds – are used by private equity firms to extend a general partner’s hold period on assets that they view as continuing to have strong growth potential while also giving limited partners in the original fund a liquidity option.

Amid more challenging funding conditions in recent years, such vehicles have also been used as an alternative to bringing in new sponsors, launching sale processes or other strategic options for private equity backers to monetise their investments.

GCP Capital Partners sponsored the launch of Alkeme seven years after exiting its Acrisure investment.

Alkeme and GCP Capital Partners did not immediately respond to a request for comment.