Greenberg's Starr Leads $4.4B MultiPlan Acquisition

Former AIG boss Maurice "Hank" Greenberg's Starr Investment Holdings LLC said on Monday it had agreed to take over health insurance claims processor MultiPlan Inc in what is by far its biggest private equity investment to date.

Financial terms were not disclosed, but a person familiar with the matter said the deal values MultiPlan at around $4.4 billion. Since its launch in 2012, all of Starr Investment Holdings' previous private equity deals have been below $1 billion.

The deal underscores Greenberg's reinvention as a prominent dealmaker. The 88-year-old former AIG chief executive and another of his companies, Starr International, owned 12 percent of AIG before its $182 billion rescue that began in 2008.

Greenberg claims the rescue was unfair to AIG shareholders and that the Federal Reserve Bank of New York charged an excessive interest rate on its initial loan. He is seeking billions of dollars in damages.

Greenberg lost his appeal last month in a lawsuit against the New York Fed. A second lawsuit by Greenberg against the U.S. government is pending before the U.S. Court of Federal Claims in Washington, D.C.

MultiPlan, currently owned by private equity firms BC Partners Ltd and Silver Lake, helps manage the claims process for big health insurers and has a network of over 900,000 healthcare providers.

Swiss investment firm Partners Group is the other lead investor in the consortium acquiring MultiPlan, which also includes a number of undisclosed investors. Rather than manage a traditional private equity fund, Starr Investment Holdings reaches out to investors on a deal-by-deal basis to seek their participation.

This approach also informs Starr's investment horizon, which can go beyond the typical five-to-seven-year period that private equity firms tend to hold companies for.

"We are duration agnostic, we can invest for a day or invest forever," Starr Investment Holdings Senior Managing Director Geoffrey Clark said in an interview.

The insurance claims services sector has seen robust private equity deal activity in the last few months, including KKR & Co LP's $2.4 billion takeover of Sedgwick Claims Management Services Inc and $1.1 billion acquisition of Mitchell International Inc and Apax Partners LLP's roughly $3 billion acquisition of One Call Care Management Inc and Align Networks Inc.

BC Partners and Silver Lake bought MultiPlan in 2010 for about $3.1 billion from rival buyout firms Carlyle Group and Welsh, Carson, Anderson & Stowe.

BC Partners and Silver Lake each invested about $600 million in equity when they acquired MultiPlan, according to a person familiar with the matter.

The two private equity firms now stand to make more than two times their money through the sale of MultiPlan, that person added, pointing out that MultiPlan's cash flow increased by 50 percent since 2010 thanks to operational initiatives undertaken at the company.

Starr Investment said the deal had fully committed financing from Barclays Plc and J.P. Morgan Chase & Co. Bank of America Merrill Lynch, Credit Suisse, Goldman, Sachs & Co; RBC Royal Bank; Dean Bradley Osborne; LionTree Advisors LLC; and The Raine Group LLC advised MultiPlan's owners.

(By Greg Roumeliotis)