NationsBank Corp. and Chase Manhattan Corp. today are expected to launch a $190 million loan to finance the management buyout of Acordia Inc., an Indianapolis-based insurance brokerage.
Knightsbridge Capital LLC and Wand Partners are co-sponsoring the buyout with a $320 million investment.
Knightsbridge, a fund formed by 10 major domestic and foreign commercial banks, is making a $70 million equity investment and arranging a mezzanine finance package that includes $40 million of subordinated debt and $20 million in preferred stock.
Syndication of the loan is slated to begin today at a meeting of banks in New York.
The investors are buying Acordia from Anthem Inc., an Indianapolis-based mutual insurance company involved in property/casualty insurance and health-care management.
Anthem started Acordia in 1989 as a third-party administrative arm to process claims. Through a slew of agency and brokerage acquisitions, Acordia has become the largest middle-market broker in the United States.
Last December when Anthem announced its plans to split off Acordia, NationsBank-which had led a $150 million credit facility for Acordia in 1991-brought the company together with Knightsbridge.
Knightsbridge, a $100 million private equity fund, invests in financial services and insurance companies. Formed in 1995, the fund is owned by Bank of New York Corp., Bankers Trust New York Corp., Chase Manhattan, Fleet Financial Group Inc., First Union Corp., NationsBank, First Chicago Corp., Dresdner Bank AG, Banc One Corp., and ING Barings.
"NationsBank knew our company in all the years that we were growing it," said Frank Witthun, Acordia's president and chief executive officer.
The bank "understands our business and cash flow," he said. "They're a partner, and that always distinguishes a bank for us."
Acordia will continue to grow both internally and through acquisitions, Mr. Witthun added.
"My sense is that we will continue our relationships with both of the banks," Mr. Witthun said. "We've been very pleased with the kind of expertise that both Chase and Nations have in the industry and have provided to us."