AUB Group (ASX:AUB): Less than 2 months after a potential $5bn takeover collapsed, its raised $400m to expand in the Old Dart!

It has been nearly 2 months since a >$5bn deal to take insurance broker roll up AUB Group (ASX:AUB) fell over. The summer may have seemed like an eternity to investors – even those with confidence in the company’s prospects would know that it would take far longer to make up the $1bn gap between the takeover price and the company’s market cap.

While investors are none the wiser as to just how long it might take to realise upside, they now have a fairly good clue as to how this might be realised. Namely, thrugh the acquisition of a UK business which AUB just raised $400m to fund.

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Overview of AUB (ASX:AUB)

AUB began life in 1985 as Austbrokers Holdings, founded to bring together independent broking practices under a shared equity umbrella. Over the next 20 years it grew steadily through acquisition and partnership before becoming the first general insurance broking network to list on the ASX in 2005; at that point it already had dozens of partner brokerages and a meaningful footprint.

In 2015 the company rebranded as AUB Group, reflecting a broader ambition beyond pure broking to risk management, underwriting agency services and advisory offerings. Since then it has expanded to operate across hundreds of locations in Australia, New Zealand and the UK, serving around a million clients and placing over A$11bn of premiums annually through its network of brokers and agencies.

AUB’s distinctive competitive position stems from its equity-based partnership or “owner-driver” model, where partner broking firms and their principals hold meaningful ownership stakes and retain operational responsibility, aligning incentives between local brokers and the group’s broader strategy. This contrasts with pure franchise networks and helps drive client retention and organic growth, particularly in SME segments.

AUB delivered strong FY25 results, reporting underlying net profit after tax (NPAT) of around A$200m — up more than 17 % year-on-year — on revenue of about A$1.5bn and gross written premium of A$11bn, with all major divisions contributing to growth and dividend increases for shareholders. For FY26 guidance, AUB has reaffirmed its underlying NPAT range of roughly A$215-227m, implying continued earnings growth in the mid-single-digit to double-digit range, despite broader industry dynamics

What investors need to understand about AUB’s market

AUB is an insurance broker rather than a provider and so needs to be look at differently than an investor would look at a QBE for instance. The underlying business model of insurance broking is intermediating between clients seeking coverage and the insurers who underwrite risk.

Brokers like AUB do not bear underwriting risk themselves; rather, they advise clients on risk profiles, shop policies across multiple insurers, negotiate terms and place business. Revenue is earned mainly through commissions on sold policies and fees for advisory services — typically a percentage of the insurance premium plus possible ongoing residual payments — while underwriting agencies within the broader group also earn fees for designing and managing insurance products

Like other brokers, AUB faces industry-level pressures rather than broad public backlash: general insurance broking is cyclical and tied to premium rate environments, claims experience, and economic conditions. Disintermediation trends (clients increasingly buying direct) and rising cost competition from insurtech platforms are structural challenges brokers across the sector confront.

BizCover is most important

The most profitable segment is BizCover. Strategically, it represents AUB’s clearest exposure to structural growth in insurance distribution, rather than the more cyclical, relationship-driven broking model.

One of the long-term threats to traditional insurance broking is SMEs bypassing brokers and buying cover directly online. BizCover turns that threat into an asset. Instead of losing business to direct channels, AUB owns a leading one. That gives the group protection against changing customer behaviour while keeping volume within the ecosystem.

We note that this segment has 45.8% EBIT margins. The company wants to push this to 50%. It also gives the company exposure to fast-growing insurance lines such as cyber businesses and gig-economy businesses where brokers can be under-represented, and BizCover is also scalable because growth does not require the hiring of individual brokers.

A takeover offer that fell through

In late 2025, AUB was the subject of intense takeover talks when Swedish private equity firm EQT launched a bid valuing the company at around A$5.25 billion (about A$45 per share) and secured a period of exclusivity for due diligence; the share price rallied on the news.

However, by early December December 2025 the EQT-CVC Asia Pacific consortium walked away from the offer following due diligence and valuation disagreements, causing AUB’s shares to weaken as the takeover premium evaporated and the company reaffirmed its focus on organic growth and strategic execution.

As we noted in our introduction, it left investors wondering when and if the company could close the gap between its <$4bn market cap and the >$5bn amount it was valued at by the suitors. And at least part of the answer seems to be UK expansion.

Stepping foot into the Old Dart

Earlier this week, AUB agreed to acquire a majority (i.e. 95%) interest in UK-based Prestige Insurance (PIHL Holdings) for about A$432 million, anchoring its UK retail broking platform and enabling consolidation of Tysers’ retail portfolios into a larger combined UK operation. This move is intended to bolster AUB’s retail footprint across Britain and Ireland and adds specialist underwriting capability and technology platforms.

It is not the first foray into the UK. Back in 2022, AUB acquired London-based Tysers, a specialist wholesale broker in the Lloyd’s of London market for around AUD 880 million, giving the group direct access to one of the world’s premier insurance marketplaces and broad specialist capabilities. Tysers operates in wholesale broking, managing general agents and retail broking, and becomes a core international division alongside AUB’s Australasian operations.

From a performance standpoint, Tysers has been contributing material earnings and value since acquisition. In FY24 — the first full year of ownership — it contributed close to A$97m to AUB Group’s underlying profit, underscoring that the business is performing in line with strategic expectations and helping to diversify and grow the group’s international earnings base.

Tysers excels as a wholesale and specialist broker and Prestige brings a complementary UK retail broking and underwriting platform, including managing general agents (MGAs) and an insurance technology stack. This suggests AUB sees significant upside from scaling retail broking and enhancing distribution, not just maintaining a wholesale foothold.

The plan to consolidate Tysers’ retail portfolios into Prestige Insurance underscores that AUB wants to create a full-stack UK operation that spans retail and wholesale broking plus specialist MGAs, effectively broadening the addressable market and cross-sell opportunities across segments.

Consensus estimates seem to think upside can be realised. The mean target price is $38.18, up 20% from the current share price. For FY26, analysts call for $1.62bn revenue (up 7%) and $1.90 EPS, representing a $221m profit which would be in line with guidance. For FY27, $1.74bn revenue and $2.05 EPS or a $239m profit. AUB’s multiples are reasonable at 8.7x EV/EBITDA and 16.8x P/E, although its PEG is over 2x.

Conclusion

As with all stocks, execution will be the key. But we think if AUB can execute, there is upside in this company.

• Who is the CEO of AUB Group?

  Mike Emmett

• What does AUB Group do?

  AUB Group is in the insurance broking business.

• How is AUB different from its competitors?

  AUB’s distinctive competitive position stems from its equity-based partnership or “owner-driver” model, where partner broking firms and their principals hold meaningful ownership stakes and retain operational responsibility, aligning incentives between local brokers and the group’s broader strategy.

• Why did AUB Group acquire Prestige?

  To help the company expand in the UK market. Prestige brings a complementary UK retail broking and underwriting platform, including managing general agents (MGAs) and an insurance technology stack; complementing the existing Tysers business.