A provider of business process outsourcing services to insurance companies is on the verge of expanding its offering after agreeing to buy a vehicle maintenance and repair company.

The Innovation Group plc, which also provides policy and claims management software, has agreed to buy National Service Network (NSN).

The company is being sold by its management, Aftermarket UK and South East Growth Fund Managers, in a deal that could be worth £6.85 million.

On completion £1.1 million is due, funded through debt, with the remainder to be paid in annual instalments by October 2012 depending on performance. The earn-out will be made in cash or shares.

Innovation chief executive Hassan Sadiq said the acquisition will turn its repair operation into a vehicle management, servicing and repair business.

NSN, established in 2003, manages a network of more than 800 independent vehicle maintenance and repair garages supporting cars as well as light commercial and heavy goods vehicles throughout the UK.

The company’s customers including Auto Protect, National Grid, AA warranty, RAC warranty and Lease drive. In the year to April 2007, NSN made a £1.8 million loss on an £18.8 million turnover.