City firm sold in $1.1-B deal

Hey there, time traveller!
This article was published 15/12/2020 (1943 days ago), so information in it may no longer be current.

Winnipeg-based People Corp. has been acquired for $1.13 billion — possibly a North American record — by the private equity division of Goldman Sachs.

“What we are told is this is one of the highest prices, if not the highest price, ever paid for an insurance platform in North America,” said People Corp. founder and CEO Laurie Goldberg.

The group and retirement benefits and human resource services company will continue operating as a standalone entity with the same management and staff and the same brand.

The deal is huge for shareholders and management — who own about 12 per cent of the company and are in line for a $135-million windfall.

Since it was formed in 2007 with the merger of a couple of local firms, the company has steadily grown over the years organically — by attracting new clients — and through acquisitions.

Goldman Sachs Merchant Banking Division paid a significant premium for the company, 36 per cent more than the closing price on Friday and 18 times its projected earnings for 2021.

People Corp. is now the largest company of its kind in the country with about 1,200 employees serving close to 15,000 corporate clients and managing group and retirement benefits for 1.6 million Canadians.

Since 2012 the company has acquired more than 20 benefits advisory firms as well as strategic technology firms.

Still, Goldberg said the company doesn’t see itself as a consolidator and credits the talent of its people for its success.

“We look for firms that are best in class across the country to join us… and when a firm joins us we are inheriting great talent,” Goldberg said.

What that means is that it has built, according to Goldberg, a “unique, differentiated value proposition” unlike anything in the industry.

Goldman Sachs apparently agrees, paying 18 times the company’s earnings, or about twice what People Corp. has paid for the companies it has acquired, an analyst said.

“The purchase price represents… a significant premium,” said Jamie Gloyn, an analyst with National Bank of Canada Financial Markets, in a note to investors.

Goldberg said the deal was struck after a special committee of the board of publicly traded People Corp. did a strategic review. It requires shareholder approval to close in the first quarter of 2021 but that is not expected to present any hurdles.

Among other things, Goldberg said the company believes for it to continue its strong double-digit growth rate it will require significant investments in technology.

People Corp.’s market differentiation features an integrated approach — designing, implementing and then managing group and retirement benefits. It may be the only firm in the country that does it all.

‘We are in a position of strength but at the same time when we take a look at it, for us to really scale to the next level we have to make significant investments in technology and people and we want to do that’– Laurie Goldberg, CEO of People Corp. 

It also has a unique technology platform to administer the plans.

Its size and scale — which helped attract a much higher multiple than People Corp. itself pays for companies — is now such that it has about $2.4 billion in premiums under management and about $13 billion in pension assets under administration.

Goldman Sachs Merchant Banking Division has been around for about 25 years and has made more than $200 billion in investments over that time.

Goldberg said he does not believe People Corp. will get lost in the shuffle of an owner with such a massive portfolio. He also believes that Goldman Sachs is committed to the company and that it would not make sense for it to flip it after only a couple of years.

Anthony Arnold, managing director at Goldman Sachs, said, “We are thrilled to be a part of the next phase of the People Corporation story… There is also a continued and meaningful investment opportunity to deploy capital and access opportunities in People Corporation’s core and adjacent markets.”

The access to capital is a key motivator for People Corp.’s board, along with the reward to shareholders.

“We are in a position of strength but at the same time when we take a look at it, for us to really scale to the next level we have to make significant investments in technology and people and we want to do that,” Goldberg said. “We felt that (doing that) with a much bigger player and to be in a non-public environment would be better for the company.”

The company’s head office employs about 350.

martin.cash@freepress.mb.ca