A good example is Aim-traded and cash-rich insurance sector investment company BP Marsh & Partners (BPM:200p). It's a company I know well, having initiated coverage at 88p ('Hyper value small-cap buy', 22 Jan 2012), and last advised buying at 216p after the board announced the sale of its 37.94 per cent holding in Besso Insurance, a top 20 independent Lloyd's broking group ('Investment company watch', 5 Jan 2017). Subsequent to that announcement, BP Marsh revealed that it received cash proceeds of £22m for the stake in Besso after adjustments, a sum £1.4m higher than expected, and one that generated a thumping internal rate of return (IRR) of 22 per cent on the investment over a 21-year holding period.
I can also reveal that the company has recently sold its entire 29.94 per cent shareholding in Trieme Insurance for almost £3m, or 15 per cent higher than the carrying value in its accounts. The investment produced an IRR of 15.6 per cent over a seven-year holding period. In addition, Trieme has repaid a £2.1m loan outstanding under a facility provided by BP Marsh, which means the total cash realisation here is almost £5.2m. The hefty cash inflow doesn't end there, either. That's because just before BP Marsh's 31 January 2017 financial year-end, the company exited its £7.3m equity investment in global insurance broker Hyperion Insurance, and received full repayment of a £6m loan outstanding.