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The company behind the Compare the Market website has cancelled plans for an initial public offering after securing a £675m investment from Canada’s largest pension fund.
The Canada Pension Plan Investment Board is buying a 30 per cent stake in BGL Group, which owns a number of insurance businesses along with UK price comparison site best known for its meerkat spokesanimals.
The deal values BGL at £2.25bn, on a par with the valuation that the IPO was expected to deliver. The IPO had already been delayed to next year.
BGL chief executive Matthew Donaldson said: “Our intention was to IPO in the first part of 2018. We were approached by a number of companies and our shareholder decided to run a competitive process.”
BGL is owned by BHL, an international insurance group with businesses in South Africa and Australia, which will take the money raised, rather than reinvesting it in BGL.
Mr Donaldson said that the private stake sale was “more attractive than being a listed business.”
In addition to Compare the Market, BGL owns LesFurets.com, a French price comparison site and BeagleStreet.com, an online life insurance company. Mr Donaldson said that it already had sufficient funds to pursue its growth strategy.
The investment comes amid turbulence in the wider UK price comparison sector.
ZPG, which owns house-hunting portal Zoopla as well as comparison sites money.co.uk and uSwitch, has been making unwanted advances towards rival Gocompare. It offered £460m for the UK-listed site last week — its second approach in six months — which was “unanimously and unequivocally” rejected by Gocompare’s board.
Mr Donaldson said that BGL had “no intention” of buying another price comparison site.
The competition watchdog has been probing the practices of comparison sites which help customers select anything from car insurance to energy contracts. In September, the Competition and Markets Authority announced it had launched a probe into one of them over its home insurance deals. People briefed on the probe said Compare the Market was the target company.
The CMA has also recently announced enforcement cases against two car hire comparison websites.
BGL’s decision to cancel its flotation comes at a difficult time for the London IPO market. Cabot, a private equity-backed UK debt collector, cancelled its float last week and food group Bakkavor briefly pulled its IPO before getting it away at a lower price.
Motor insurer Sabre is pushing ahead with its IPO plans however. On Thursday it announced a price range of 220p-240p for its shares, which would give the company a market capitalisation of £550-£600m. Sabre, which is marketing the IPO to both institutional and retail investors after plans for a private sale came to nothing, will have a free float of between 35 per cent and 50 per cent of its shares.