Takeover speculation - Steadfast Group targeted by Blackstone in $7bn buyout talks | The Australian

AUB’s larger insurance broking rival, Steadfast Group, is now the topic of private equity interest, with talk that New York-based powerhouse Blackstone is assessing a possible buyout of the $5.5bn business.

It comes at an opportunistic time, with Steadfast’s share price still to fully recover after chief executive and managing director Robert Kelly became the centre of a workplace complaint, from which he has since been cleared.

The shares fell from a $6.63 high for the year and closed on Thursday at $5.

Mr Kelly is the founder of the business, which launched in 1996 with 43 brokerages and has over 52 years of industry experience.

He has grown the company to become Australia and New Zealand’s largest general insurance broker network and group of insurance underwriting agencies.

Also hurting share price performance is that insurance premium growth has come under pressure, with forecasts downgraded.

It comes just days after private equity firms CVC Capital and EQT walked away from a plan for a joint $5.3bn bid for Steadfast’s smaller rival, AUB.

While it’s unclear what spooked the private equity bidders, sources say the logical reason is that the company’s premium growth was lower than they anticipated, causing them to determine the company was not worth $45 per share amid due diligence.

Steadfast said at its October annual general meeting that the first three months of the 2026 financial year had seen a lower increase in the premium rate in Australia compared with its expectations of a three to five per cent increase when the 2026 financial year guidance was originally set.

“We now anticipate the average premium rate increases for the full year will be between one and two per cent,” Steadfast chairman Vicki Allen said in her speech.

AUB said at its AGM that it had not observed the same industry trends surrounding premium rates during the first quarter, and rather, observed premium rate rises in Australian broking in the range of 5 to 7 per cent.

In October, Blackstone bought a major stake in India’s Ace Insurance Brokers.

The private equity firm is the world’s largest asset manager with more than $US1 trillion ($1.5 trillion) under management and has owned other insurance brokers in the past.

However, some were cautious about whether Blackstone would move on the target, given the sheer size of the company, making a deal tougher to execute.

Adding a 30 per cent premium, buying Steadfast would cost Blackstone over $7bn.

But further consolidation is expected in the insurance broking space.

Last year, the Australian-listed PSC was sold to Ardonagh for $2.26bn.

Private equity firms are drawn to insurance brokers because they are capital-light, have recurring revenue streams and it is a fragmented market that is ripe for consolidation.

It also has defensive characteristics.

Another drawcard is that the groups hold cash that they receive from customers that they can earn interest on before making payments to insurance providers for products.