Operator: Good morning, ladies and gentlemen, and welcome to the B.P. Marsh & Partners PLC half-year results investor presentation. Questions are encouraged. They can be submitted at any time via the Q&A tab that is just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish responses where it is appropriate to do so. Before we begin, we would just like to submit the following poll, and if you could give that your kind attention, I am sure the company would be most grateful. I would now like to hand you over to CEO, Dan Topping. Dan, good morning, sir.
Dan Topping: Good morning, everyone, and thank you for joining us. For those I have not met, I am Dan Topping, Chief Executive of B.P. Marsh, and I am joined by Fran Chappell, our CFO. Fran is currently on maternity leave, having had a baby daughter around 3 months ago and has kindly taken some time out to present the results with me, which we are very grateful to her for. Obviously pass on her congratulations to Fran and her family. Because of that, we pre-recorded today's presentation and then I will take your questions live afterwards on my own. Any specific details that fall under Fran, that I cannot cover, Fran will follow up on post. Moving to the results. The half year has delivered positive NAV growth. The portfolio has continued to grow. We have made 3 new investments, and we paid GBP 30 million in dividends to shareholders.
Dan Topping: We are pleased with our performance in the period and positive about the shape of both the portfolio and the balance sheet as we look ahead. The theme of today's presentation is converting portfolio value into shareholder returns. We have been doing that for some time, although perhaps we have not always been quite as good at talking about it as we have at doing it. We thought it deserved rather more prominence today. I will start with the business and the portfolio before Fran takes you through our liquidity and capital allocation. I will then come back to pull the threads together before we open up for questions. For those who know us well, the model will be familiar. We invest in insurance and financial services businesses, generally at a stage that is too early for traditional private equity, but where the management team have the experience and ambition to build something considerably larger.
Dan Topping: We focus on parts of the market that traditional funding sources tend to underserve, across the UK, North America, Australia, Europe, and Asia. We bring decades of sector experience and an extensive network to those markets. Our initial investment is typically up to GBP 5 million for a minority holding of between 20% and 40%. We want the people running the business to retain a meaningful interest in what they are building. We see skin in the game as very important to our management teams. We bring patient, flexible capital, deep specialist knowledge of the sector, and long-standing relationships across the insurance market that few investors can match. Because this sector is our specialism, we understand these businesses in a way that generalist investors rarely can, and we stay closely involved as they develop. Being a supportive partner sometimes means helping with an acquisition or a senior hire.
Dan Topping: Sometimes it means working through a problem. It certainly means rather more than turning up twice a year, asking how things are going and hoping for the best. Although, I appreciate that that would make life significantly easier for the team at B.P. Marsh. That approach gives us access to opportunities through people who know us and understand how we work. Over time, we believe that this has delivered a considerable advantage. For our shareholders, the proposition is participation in that growth with a long and consistent track record of delivery, which the next slide illustrates. This slide puts the latest results into a longer term context. NAV now stands at 372.2 million, compared with 360.2 million at the end of January. NAV per share is GBP 10.48, and this slide shows compound annual growth rate of about 10.9% since flotation.
Dan Topping: For me, the important point about this chart is the consistency over time. We are not suggesting every year has been spectacular. Anyone who has worked with B.P. Marsh long enough will know we are not easily carried away. But the cumulative result is one of which we can be quietly confident. Individual businesses develop at different speeds, and realizations can make one period look rather different from another. But across the portfolio, the long-term direction has been encouraging. That consistency is no accident. Compound growth of more than 10% a year since flotation is the product of a very consistent strategic approach, backing experienced management teams in the sector we know, investing on sensible terms and supporting those businesses over the long term. That strategy has not changed, and it will remain the foundation of the future value we are confident of delivering.
Dan Topping: The chart also identifies the capital raised along the way, which is relevant when looking at the growth in absolute NAV. NAV per share is therefore an important part of the picture. We do not expect every six-month period to look identical. We do expect to keep applying the same discipline to the businesses we back and to the price and terms with which we invest. Turning to the results themselves, NAV increased by 12 million over the six months, or 3.4%, and is 6.5% higher than a year ago. The growth came alongside GBP 13 million of dividend distributions, and shareholders therefore have received a meaningful amount of cash while the remaining net asset value has continued to increase. NAV per share rose by 3.8% over the six months and 9.7% over 12 months. On a fully diluted basis, it stood at GBP 9.96 at the period end.
Dan Topping: The equity portfolio was valued at GBP 296.5 million. Growth, adjusted for additions and disposals, was approximately 8.8% over 6 months and 16.2% over 12 months. We have invested in the aggregate GBP 8.1 million across three new businesses, comprising GBP 3.9 million of equity and GBP 4.2 million of loan facilities, and ended the period with GBP 37.4 million of available capital. Consolidated profit before tax for the 6 months was GBP 22.8 million. The total shareholder return was 7% for the period and 10.2% over 12 months. Those are NAV-based measures. The share price experience is a separate consideration, which we will come back to later. One of the questions we quite reasonably get asked is how the portfolio valuations translate into cash. The eight highlighted disposals on the slide show GBP 20.6 million of invested against GBP 178 million of aggregate proceeds, representing an 8.7x multiple of invested capital.
Dan Topping: Looking at these investments, these are approximately over the last 5 years. It is not cherry-picking something over 5, 10, 15, or 20 years. These are recent realizations, and I think that demonstrates what we have achieved and at what value, and the strength and depth of the portfolio in terms of when we bring it to market. SSRU is a good example. We backed the business in January 2017 with a nominal equity amount of just GBP 19, alongside a loan facility of circa GBP 500,000. We exited that business in December last year with proceeds of approximately GBP 28 million and an IRR of just under 90%. This business developed over an 8-year relationship into one of Canada's leading underwriting platforms. CBC, another example of supporting management team through growth and ultimately to a sale. Total proceeds to B.P. Marsh were GBP 62.7 million.
Dan Topping: This incorporated GBP 18.7 million of deferred consideration, which led to an overall IRR of just under 49%. Some transactions also include deferred consideration, so the cash receipts continue after the sale, as was the case with CVC. NEBC, which we discussed previously, has not had the stellar returns of SSRU or CVC, but once deferred consideration is hopefully bundled in, it will be at or around 10%. It has delivered GBP 10.9 million in proceeds to date, and we are expecting circa GBP 7, perhaps more, million in a final installment due in April of next year. I think this all looks at the way we approach things as a patient investor, but I suppose patience in of itself is not an investment strategy in isolation. Eventually, the value has to turn into cash. These transactions demonstrate that it can, and on terms which give us considerable confidence in the valuations and our model.
Dan Topping: I think it is worth spending a moment on how we arrive at the valuations in the first place. We gather financial and operational information for the portfolio companies, consider market conditions, relevant transactions, and external benchmarks. This is where being specialist really matters, because we have spent decades investing in this sector. We understand what drives value in an MGA or a broker, the quality of underwriting, client retention, the strength of insurer relationships. We feel that means we can interpret the numbers in context, recognize what they are telling us when they are telling a different story from the narrative around them, and ask the right questions at the right time. Our four-member valuation committee reviews each investment, submit their own conclusions to the committee. The committee discusses it, agrees the numbers, and then submits it to the board for approval.
Dan Topping: Throughout, we apply a consistent, we think, prudent approach in line with the industry guidelines. Clearly, the valuations also subject to independent scrutiny. Our external auditors, RSM, review them as part of the full-year audit, and we feel, and I think they certainly feel, they provide robust challenge and add quite an important additional layer of assurance for our shareholders and the wider market. In terms of how we look at valuations, whilst we do not disclose them to avoid them being used against us when it comes to a transaction, earnings multiples are commonly used, but the right method depends on the business and at what stage of development it is at. We give reference to cost, revenue multiples, DCF, or imminent sale where we have got a value that we think is tangible.
Dan Topping: Newer investments tend to be held conservatively until they have built a track record, given it is not B.P. Marsh's experience, but the wider market in terms of startups has a less than successful track record. We do not want to put undue burden on our startup businesses when they are just at the beginning of their story. I think ultimately the best test of any valuation is what happens when a business is sold. Again, moving back to SSRU, it is a good example. When we came to sell, the price we achieved was comfortably ahead of the valuation we had been carrying out, and CVC was a similar story. There is obviously judgment involved, as there is with any private company transaction and valuation, but the process gives the judgment a clear structure, and our realizations give us confidence that the values we report hold up.
Dan Topping: In terms of new investments, we completed 3 new investments in the period. Nine Edge Wealth and Ventura Risk Partners in March, followed by Autonomy Investment Partners in June. These follow the 8 new investments made in the previous financial year. There is a substantial group of younger businesses within the portfolio, alongside the more established holdings. We reviewed 42 new opportunities during the 6 months. 60% came through referrals or introductions from our network. I would say that is as good an indication as any of the value of the relationships we have built up over the years of B.P. Marsh. 36% of the opportunities were international, and 95% were insurance intermediaries, and we feel that focused on the sector we know while giving us opportunities across different markets. Of course, seeing an opportunity and investing in it are 2 different things. We need to be comfortable majoritarily with the people.
Dan Topping: That is fundamentally 99% of what we are doing, but also the business plan. Again, we can deploy our sector expertise to review business plans and where generalists probably cannot, and we can keep it in-house. Also, as a final point, the terms, which is how we build our valuation growth. The fact that we have capital available does not make every proposal a good investment. If anything, we have learnt having money to spend is when discipline matters the most. Our patient model does not require us to deploy capital immediately, as it might be with a fund set up. Our investment process has been refined and developed over the years, and the experience gives us real confidence that the decisions we make, both on what we back and what we pass on, are the right ones.
Dan Topping: The intention is to keep bringing promising businesses into the portfolio while supporting the ones we have already backed. Slide 9 shows the breadth of the portfolio, 11 MGAs, 8 brokers, and 4 other diversified financial businesses. Within insurance, those businesses operate across various different specialist product areas and geographies. The common feature is the expertise of their management teams and the opportunity to build valuable distribution businesses. MGAs bring underwriting expertise and access to insurer capacity. Brokers connect the clients with insurance markets. Both can create considerable value and they have a clear proposition and execute it well. To give a sense of scale, on 2026 budgets, our MGAs are writing approximately GBP 970 million of GWP, generating GBP 112 million of commission income, and our brokers are placing around GBP 1.6 billion of premium, generating around GBP 155 million of brokerage income.
Dan Topping: It is sort of tallying around GBP 2.5 billion of premium across the portfolio, which, whilst we are on the small side, does give an indication of the heft of the B.P. Marsh portfolio. The non-insurance investment gives us exposure to, we think, our adjacent areas, financial advice through Nine Edge and specialist SME lending through iO Partners. But again, it is the caliber of the management teams that we back, that we hark back to in our understanding to review the business plan. Alongside, in the case of iO Partners, another supportive shareholder in the guise of Janus Henderson. On Gambit Re, our fully collateralized reinsurance vehicle, which provides capital to XPT, one of our larger brokers investment company, underwriting arm. Platinum is its underwriting agency, and Gambit supplies the part of the reinsurance capital to that, alongside other rated insurance companies.
Dan Topping: Autonomy is our newest investment, and it provides minority growth capital to insurance distribution businesses in the US. It is a similar model to B.P. Marsh, but with a bigger check size. We are a minority investment alongside senior management at XPT, but the majority owner is BharCap Partners out of New York and Connecticut, which is a multibillion-pound fund management business, multibillion-dollar private equity investor. I think the breadth is useful, although it does not mean the portfolio is immune to change in the insurance market. But we do remain specialist investors, and we need to understand the conditions each business operates in. On market commentary, I think everybody has got an appreciation of where insurance premiums are going at the moment.
Dan Topping: Given our focus on early-stage startup businesses, the vagaries of a hardening or softening market apply less to us than most because it is very much the policy count, and new business that affects us as opposed to getting in and out on cyclical trends. Looking at the key holdings, Pantheon, XPT, and ATC, our three largest holdings and together represent just over 57% of NAV. So it is worth looking at them in a little more detail. The returns on those investments to date are just under 100% for Pantheon, circa 25% for XPT, and just over 36% for ATC. Our value at Pantheon is about GBP 112 million, representing just over 30% of NAV. Our holdings increased in Pantheon from 39% to 41%.
Dan Topping: We bought shares from the management team to allow them to partially realize capital, as opposed to looking at wider strategic reviews, which might have meant a liquidity event for management. B.P. Marsh management felt that they have got much greater bandwidth to grow the company. They have grown revenue at a striking rate since formation over the first two and a half years. The 2026 budget is strong at GBP 27 million, and it really reflects the scale it has built in such a short time as one of the few independent mid-market London specialty wholesale brokers that is management owned, unencumbered by significant levels of third-party debt and has a management team that is building for the future, whereas some of the larger brokers have got shorter term horizons or their peer group of mid-market independents have been consolidated.
Dan Topping: Pantheon is an attractive home for brokers to join and the growth they have delivered has been organic as opposed to through acquisitions. I think that is certainly management's strategy going forward at Pantheon. Moving to XPT, about GBP 57 million valuation or 15.3% of NAV. This US insurance distribution platform is growing through both organic and M&A. The slide shows 45% compound annual growth rate in GWP since formation and budgeted GWP exceeding over $1 billion for 2026. In the period we have invested in that business, it has grown tremendously well and the management team continue to see great opportunities to continue to execute on their strategies. They have brought in greater firepower from a variety of lenders to finance their M&A.
Dan Topping: We probably will not be supporting that in any material way, but we still maintain 26.5% shareholding that we think is material and see really good upside in XPT. Turning to ATC, just over GBP 44.5 million, 12% of our NAV. It is Australian, probably APAC's largest independent Lloyd's cover holder. A diversified product base. Premiums compounded at 20% since our investment and its financial year 2027, its budget to exceed 370 million Aussie dollars of GWP, which is tremendous year-on-year growth, and we continue to support ATC with their plan. I think looking at it, the management team there and the Executive Chairman, Chris Anderson, has views that incremental targets over and above next year's budget fall to half a billion of premium or a billion of premium. I think what these businesses demonstrate is the scale that can develop from our minority approach.
Dan Topping: We do not claim we have built them ourselves. The management team deserve huge credit here. Where we have fallen into this is our role has been to identify those teams, back them and help them grow and provide the structure in and around it, the governance, the focus on the day-to-day nitty-gritty of can trip up early-stage businesses, and that is what we focus on to allow the management teams to deploy their entrepreneurial vim and vigor to go out and grow the businesses which they demonstrably have done. The outcome gives us good reason to have confidence in that approach, and I think this slide shows that. Looking at the wider portfolio composition here is the slide that we are looking at alongside the three largest holdings with businesses such as Oneglobal and Cedaris, as well as a number of other growing investments within the portfolio.
Dan Topping: A small percentage of NAV today tells you the current size of the holding. It does not necessarily tell you how much time we spend on it or what it might become. The larger investments also had to start somewhere and quite modest in many cases. Additionally, as demonstrated by transactions highlighted previously in the presentation, B.P. Marsh can provide investment through a leverage structure where appropriate, or full on funding, equity release in a variety of ways, and in ways that most privately backed companies cannot access it. Our ability to write more than one check, provide equity injections, which is not good, or loan facilities, allows us to provide an optionality of funding to our portfolio companies. It is our job to support the established businesses while giving the younger ones the opportunity to develop.
Dan Topping: We do not assume that every company follows the same path, but having businesses at different stages is an important part of sustaining the model. The equity portfolio accounts for approximately GBP 296.5 million of NAV, with a balance of circa GBP 75.7 million or 20% of NAV held in cash or in the loan book within the portfolio. Fran will say more about how that is managed. At this juncture, I will now hand over to Fran to take you through the liquidity position and how we are balancing investment with shareholder distributions.
Fran Chappell: Thanks, Dan. At 31 July, cash and treasury balances were GBP 37.4 million, compared with GBP 49.5 million at the January year-end. That gives us capacity to support existing portfolio companies and consider new investments. The loan book stood at GBP 46.9 million, compared with GBP 38.7 million at January. During the period, GBP 18.1 million of loans were granted and GBP 10.1 million was repaid. The average interest rate on the loan book is 8.3%, and by 13 October, the loan book stood at GBP 47.9 million. Loans are an important part of how we support the portfolio alongside equity. They allow us to provide funding as businesses develop and repayments can make capital available for further use. The loan book is not, however, the same as immediately available cash.
Fran Chappell: On treasury, our approach is deliberately conservative. The GBP 37.4 million is spread across Rothschild, Rathbones, GAM, Coutts and Lloyds, so we are not reliant on any single institution. The funds are held in a mix of cash deposits and investment-grade corporate bonds, so they are readily available to draw on as required. Our priorities for cash and treasury are security and liquidity first, with yield after that. That is why the maximum deposit period is one month, as the cash needs to be there when a portfolio company or a new investment needs it. The portfolio is where we take investment risk. Treasury is not. Even so, the average return on treasury funds over the period was 3.3%, which makes a useful contribution while the cash waits to be deployed.
Fran Chappell: We therefore have both capital already working within the portfolio and liquidity available for the next opportunities. The purpose is to retain flexibility as well as support growth. Our capital allocation approach balances the funds needed to grow the portfolio with meaningful distributions to shareholders. In July, we announced a new share buyback program. The revised authority permits purchases of up to 3.71 million ordinary shares. That is an authority rather than a commitment to purchase the full amount.
Fran Chappell: During the period, 120,000 shares were purchased for total expenditure of approximately GBP 815,000 at an average price of GBP 6.77 per share, well below diluted NAV per share of GBP 9.96. Buying shares below NAV can increase NAV per share for the remaining shareholders. We consider that benefit alongside the capital required by our portfolio and the opportunities to make new investments. Dividends are the other important part of the equation. We paid GBP 13 million during the period, and the board intends to pay at least GBP 7 million for the financial year ending January 2028.
Fran Chappell: The aim is to retain enough capital to keep building value while allowing shareholders to participate in the cash generated by successful investments. This chart shows how those distributions have developed over time and their relationship with realizations. The GBP 13 million paid during the period included the GBP 8 million special dividend in March following the sale of SSRU. By July, total dividends distributed to shareholders stood at GBP 37.7 million. That equates to 107.1 pence per share, equivalent to 76.5% of the original flotation price of 140 pence. That comparison illustrates the cash returned over time alongside the value retained in the business. The additional GBP 7 million shown for the financial year ending January 2028 represents the board's stated intention.
Fran Chappell: Realizations can lead to larger distributions in particular years. We therefore look at the dividend record over the time, rather than assuming that every year's payment will follow the same line. The GBP 13 million distribution comprised GBP 2.5 million in February, the GBP 8 million special dividend in March, and a further GBP 2.5 million in July. In total, that was 36.29 pence per share. Earnings per share for the period was 66 pence. As Dan mentioned earlier, the NAV base return, including dividends, was 7% over 6 months and 10.2% over 12 months.
Fran Chappell: The longer-term chart compares the share price and NAV per share with the AIM indices. It's useful context, but those rebased series should be read separately from the NAV plus dividend return measure. We recognize that shareholders also care about the price at which they can buy or sell their shares. Continuing to grow NAV, demonstrating realizations, and returning cash are the parts of that proposition we can work on directly. I'll now hand back to Dan to conclude.
Dan Topping: Thanks, Fran. We've had another good year. I think just before I go into the concluding remarks, I think it's really important to thank each and every portfolio management team, the teams that sit below them. They're the key drivers for growth. I think it'd be remiss of us not to say thanks to them, and we really do have strong faith in their ability to continue their journey and deliver their NAV growth to B.P. Marsh. I'd also like to thank the wider team at B.P. Marsh who aren't in this presentation, but put in a real shift across the year in delivering these results. I just wanted to mark the card that there's a great degree of appreciation from myself and Fran and the board of B.P. Marsh in terms of how these results have been delivered.
Dan Topping: A good year, but I do think the evidence supports it. The 6 months has been really good. NAV increased to GBP 372.2 million. The equity portfolio has grown by 8.8% over 6 months and 16.2% over 12 on an adjusted basis, and we delivered GBP 13 million to shareholders in dividend, giving a total shareholder return of 7% for the 6 months and 10.2% over 12 months. Halfway through the year, we remain in a strong position. There is no need to dress that up with extravagant predictions. The portfolio is doing what we want it to do, and our job is to keep supporting it. We have continued to grow NAV, support new and existing businesses, realize value at the appropriate time and return capital to shareholders. We enter the H2 with capital available to deploy, an active pipeline of opportunities and a portfolio that continues to perform well.
Dan Topping: We have added three new investments following eight in the previous financial year, and with GBP 37 million or so of available capital to support the portfolio and pursue further opportunities to deliver shareholder returns. The larger holdings demonstrate what the model can produce as businesses develop scale. The younger investments give us the opportunity to keep that process going. Our realization record is also very important. It gives shareholders in the wider market evidence that the value we report can translate into proceeds, and that those proceeds can support both the further investments and distributions. We remain confident in the opportunities within the portfolio and in the pipeline. That confidence comes from the progress of the businesses, the quality of the people running them, and the evidence from realizations, rather than from any assumptions that markets will always be kind to us, which you can not rely on.
Dan Topping: As ever, we will be selective about where we commit capital and realistic about the time it takes to build a business. As the slide says, we are farmers, not hunters. I suspect that is probably not the most fashionable description of an investment company, but I think it is fair when it comes to B.P. Marsh. We back capable people, stay involved as their businesses grow, and make disciplined decisions about when to invest and when to realize value. We have done that for many years. The results give us confidence in it, and we see plenty of scope to continue. Just like to say thank you for your time, and after this, I will be taking questions.
Operator: Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that is situated on the right-hand corner of your screen. Just while the company take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your investor dashboard. Leah, at this stage, if I may hand over to you to chair the Q&A with Dan, and if I pick up from you at the end, that would be great. Thank you.
Leah Lashkari: Thanks, Jake. We have had a few questions around Pantheon's valuation and how Pantheon now represents 30% of our NAV. Dan, could you speak a little bit about how you view the weighting within our portfolio?
Dan Topping: Yeah. Thanks, Leah. I think if we deal with the valuation question first, I think someone said we appear to be valuing Pantheon at 10x forecast 2026 revenue. Then another one germane to Pantheon's valuation. Firstly, we do not publish our valuation methodology primarily so it is not used against us by interested parties. But what we do is have a very robust valuation committee, and our RSM auditors obviously provide audit oversight on our valuation methodologies. That being said, in terms of wider market comparables that are publicly available, MarshBerry, a corporate finance advisory firm that is US and UK based, that specializes in financial services and been across a lot of insurance distribution transactions, has got its mark in terms of precedent transactions at about 15x to 16.5x forecast EBITDA.
Dan Topping: Whilst we do not publish our valuation methodologies, we feel that we sit well within comparables and would consider ourselves somewhat conservative. On the exposure to Pantheon. Look, I think in some respects it is a victim of its own success. Pantheon has only been an investment coming up three years. It has grown very significantly, very quickly, and we are obviously very happy with it. We started at 25% for a GBP 25 investment. We are now at 41% for a materially larger investment. We have acquired those shares from management at valuation increase increments that has been substantiated by third-party validation, and I feel like it sort of underpins our flexible approach and our management support first approach. As much as we wanted to participate in the growth of Pantheon, every time we bought shares, it has then kicked on.
Dan Topping: We have allowed management to realize or partially realize some shares that take care of their own personal obligations, as opposed to looking at wider strategic potential, which again, would limit our upside if we were not able to do that. I think it is the right balance that we have struck with Pantheon. Clearly, my expectation is that Pantheon should continue to grow.
Dan Topping: If it does continue to grow in line or about in terms of where it has done over the past three years, then it will always make up a meaningful percentage of our NAV. Again, going back to my first point, a victim of its own success. That being said, the wider portfolio and the newer investments are starting to really motor and kick on. I do think there is that. Across the 26 companies, a really good breadth of wider value. But there will always be, hopefully, successful outliers, which we have with Pantheon, ATC, and XPT.
Leah Lashkari: Thanks, Dan. Another question from someone about XPT. XPT's value fell from GBP 64 million to GBP 57 million in the H1, while you received $12.1 million back. Once that cash is added back, did XPT's value go up or down?
Dan Topping: XPT's value did go up. It went from that value at just under 30% shareholding to that value that Lila's mentioned, at a 26% shareholding. So there was moderate increase in value, whilst at the same time returning capital to us as part of reducing our overall aggregate shareholding percentage.
Leah Lashkari: Discount to NAV, why not put more into buybacks rather than special dividends?
Dan Topping: I think we like to strike a balance. We are a growth share, and we pay dividends. We recognize what our shareholder base looks like and wants. We have made meaningful share buybacks over the past two years, much more materially than we ever have done since flotation. That being said, we want to keep enough dry powder to take advantage of where the market is moving. In terms of returns, we think the portfolio has tremendous upside and the new business pipeline is very good. I think it is striking a balance and, look, the focus is on minimizing the discount to NAV, and it is at 30% now. I think that it is all well and good to say you are going to cut the discount by improving investor relations.
Dan Topping: Actually, I think where we have got to that 5% to 15% discount to NAV, it is on the back of new investments, realizations, a growing dividend policy, and share buybacks. I think as long as we continue to do that, broaden the shareholder base, then I am pretty comfortable that we should have a meaningful impact on discount to NAV.
Leah Lashkari: Thanks, Dan. A few more questions. Insurers are buying specialist MGAs. Are you getting more approaches for your holdings? Are softer insurance prices pushing down the values you can sell at?
Dan Topping: I think, yeah. It is fair to say that we are getting no less approaches regarding our MGAs. I think to put it into context of softer insurance prices or premiums going down, is that impacting our businesses generally? Because we focus on early stage companies, as opposed to established ones that might have benefited from a three-year period of hardening or increasing premiums, we are very much focusing on policy count, not premium value. So we are, to an extent, insulated from softening prices within the portfolio. Are softening prices pulling valuations down? No, I think we have seen certainly where you have got a fast-growing, profitable, cash-generative business, multiples still remain at the high end.
Dan Topping: Where there has been a significant degree of consolidation within the distribution market, what is left will reflect the quality of the business. Where we have sold to consolidators, we have attracted relatively high multiples between 15 and 25 times. Now, we don't value our portfolio at that, but the way we structure our investments, we feel, presents our assets in the best possible light when it comes to a management-led sale process. No. I would also say, in a softer market where there's more premium available at less prices, insurance carriers are looking to increase their distribution, and access to that via MGAs is obviously one port of call.
Leah Lashkari: Thanks, Dan. How do your valuations, for example, multiple of revenues or GWP, compare to peers?
Dan Topping: Well, I would obviously say conservatively, as a starting point. Look, we provide a lot of comparable valuations to the market by the nature of our transactions. Given our five or six exits over the last five years or so, all have been, I'd say, market leading. That's not to say that we value our holdings that we carry forward on an exit multiple. We don't. We discount it back from minority positions, and have the collateral from the advisory side of the industry to be able to peg them. Then when we submit our valuation file to RSM, they've got their own in-house knowledge in terms of valuing investment trusts and investment companies, but we can also supply the collateral alongside that to justify where we peg things.
Leah Lashkari: Thanks, Dan. One other question's come through. Which proportion of proposals do you accept, and is the competitive position for funding less favorable in the US and Canada compared with the UK? Are you seeing attractive opportunities for the deployment of your large cash holding?
Dan Topping: In terms of what we're seeing, the conversion rate is pretty low. I'd say between 0% and 2.5%. If we see 80 or so per annum and look to do three to five, of that 80, there's probably another 20 or 30 that we don't even register as inbound because it's so diametrically opposed to our appetite. So it is on the low side. Look, you should put the There we go. Is competitive position for funding less favorable? No, I think what we offer is so unique as a minority investor in management-owned and controlled businesses with a long-term horizon that our offering continues to be attractive.
Dan Topping: With markets moving the way they are, with the underwriting agencies, due to regulation, due to the preference for new start syndicates at Lloyd's or insurance companies more generally to be meaningfully into the hundreds of millions of premium income, if not billions, it really removes an area that was there at Lloyd's in particular of people establishing specialist managing agency syndicates to write lines of business. That's now closed off. So the only real option for those entrepreneurial underwriters that want to focus on their area is to set up an MGA. We're not the only provider of capital to support MGAs, but we are the only provider of capital that only wants a minority position, wants management control, and doesn't insist on exit triggers. So, that offering continues to grow. Looking at the broker markets, there's been a significant degree of consolidation.
Dan Topping: I suppose in some respects we've supported I think with that, it's starting to throw off people who are disenfranchised, don't want to be consolidated again. Insurance is nothing if not history repeating itself. I think we're staring down the barrel of a period of quite a few new start brokers, and whilst we're not the only game in town for those, our offering is unique, good or bad. But I would say it's also subjectively very compelling for these people who don't want to be part of a big corporate, look to the likes of Pantheon and Lilley Plummer Risks and others in terms of what they've achieved, and see B.P. Marsh as a very attractive home for them as an investor.
Leah Lashkari: Thanks, Dan. After your loan, Autonomy, and XPT commitments, how much of the GBP 37.4 million is actually free for new deals and buybacks?
Dan Topping: As well as we have also set aside within that amount, the 2028 financial year dividend. It is probably more than half without wanting to split it out too much, but it is more than half.
Leah Lashkari: Thanks, Dan.
Dan Topping: Let me have a look at that one for a moment. Yeah.
Leah Lashkari: For some of these successful investments, is it necessary to sell them or could you become longer-term investors or at least retain a smaller stake? Are these sales driven by agreements with management?
Dan Topping: Look, we are nothing if not flexible in our approach. We are not rigid. We are not tracked by a GP/LP structure, where it is deploy the capital in 2 years, return it over 5 to 7, and then that is it. When you look at these investments, we can be flexible. When we were in Howden, we were initially expecting to exit when 3i came and invested. Management wanted the co-investment, and we took that through another stage of growth. Certainly with some of the other portfolio companies, more recently, Oneglobal, which is majoritarily owned by J.C. Flowers, we are only a smaller investor, but we feel like we have added value to that position and work with the management. Look, we look for management-driven sale processes because we think managements are the best observer of ultimate value.
Dan Topping: We obviously impart our opinion on it and protect our position, but generally, if you work in partnership with a management team, you should have an alignment of interest. We like a management-driven sales process. We are very flexible on exits and as we have got bigger and some of our portfolio companies have got bigger, it is certainly something that we look at to deliver long-term shareholder value.
Leah Lashkari: Thanks for that, Dan. I think we have time for one more question. One from Robert: "I think I noticed another Pantheon investment that has been made more recently. If I am right, is it investing in another different part of the insurance market?
Dan Topping: Well, no. I don't think Pantheon has. No, Pantheon is very much focused on Lloyd's Market wholesale insurance broking. XPT has moved into certain other. Well, it is developing its footprint within the insurance broking sector by value-added either acquisitions or investments. XPT is sticking to its knitting in terms of what it is going to do, but it is widening its footprint in where it wants to be.
Leah Lashkari: Well, thank you so much, Dan, for your time. I think we'll hand back to Jake now.
Operator: Perfect, guys. That's great. Thank you very much indeed for addressing all of those questions that came in from investors this morning. If there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended. But Dan, perhaps before we now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that'd be great.
Dan Topping: Firstly, many thanks for everybody attending. We're delighted with these results. I think it's another continuation of what we said we do, we will do, and we'll continue to do that. I think the team's well set, the portfolio is well set, and the new business pipeline is very strong. So there's an air of quiet confidence with B.P. Marsh that we'll continue to deliver on what we've achieved over the last 5, 10, 15, 20 years. But looking at over the last 5, 10, where the incumbent team really hit their straps, I think that's what we're looking to do. Just circling back because there was quite a large degree of questions and there is limited time. We'll get back to everybody on the questions, but I just wanted to say that.
Operator: Perfect, Dan. That's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide
