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US private equity firm circles Towergate

A US-based private equity firm has joined the battle for troubled insurance broker Towergate, after purchasing a portfolio of the company’s senior loans.

The Sunday Times reports that Apollo, a $164bn investment firm, is plotting a £715m debt-for-equity deal to acquire Towergate, which last month revealed it had received more than one takeover bid. The firm has appointed Evercore and Rothschild as joint advisers as it seeks a buyer.

Any such move from Apollo would face opposition from three US-based funds that previously purchased more than £300m in Towergate junior loans – loans that would likely be written off in the event of a separate takeover.

Towergate founder and deputy chairman Peter Cullum is understood to be putting together a rival management buyout deal, while risk and insurance consultancy Marsh & McLennan is said to be planning its own bid.

Towergate owns advice business Towergate Financial and Paymentshield, which provides insurance products to mortgage brokers. Mortgage broker John Charcol is also part of the group.

Earlier this year, the firm revealed Towergate Financial is under investigation by the FCA over “issues” related to enhanced transfer value exercises and unregulated collective investment schemes. The company stopped advising on ETVs in Q4 2012.

Income across Towergate in the year to 30 September dropped marginally, from £332.5m to £328.5m.

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