Yahoo Finance Rothesay Serves Up £8bn Aegon Takeover
A pensions vehicle backed by Goldman Sachs (NYSE: GS-PB - news) is in advanced talks to buy a £8bn annuity book in a deal that would rank among the industry's biggest-ever deals.
Sky News has learnt that Rothesay Life entered exclusive discussions in recent days to acquire a major chunk of assets from Aegon UK, the Dutch-owned insurance and pensions group.
If completed, the deal is likely to be funded by a combination of Rothesay's existing resources and capital from its group of investors, which include Blackstone (NYSE: BX - news) and GIC, the Singaporean state-backed fund.
The sale by Aegon (Swiss: AGN.SW - news) , which has been on the cards for several months following radical changes to the pensions market introduced by George Osborne, would involve thousands of policy-holders moving to Rothesay.
The precise price being paid by Rothesay is unclear, and sources cautioned that the deal could yet fall apart.
It (Other OTC: ITGL - news) would be the latest in a string of deals in the industry as new regulatory requirements force a rethink among major insurance companies.
Rothesay, which is run by Addy Loudiadis, launched in 2007 and has established itself as one of the leading providers of regulated insurance solutions in the UK market for what it describes as pensions de-risking.
It makes payments of roughly £900m a year from more than £19bn of insurance contracts, and has struck deals with companies including British Airways, General Motors (NYSE: GM - news) , P&O, Rank and RSA Insurance.
It has been considering a stock exchange listing, and if completed, the deal with Aegon is likely to propel it to a substantially higher valuation when it eventually goes public, according to bankers.
Aegon - which is best-known in the UK for its sponsorship of the annual pre-Wimbledon tournaments at Queen's Club - remains committed to its other UK insurance operations.
Reforms to the annuities market introduced by George Osborne have created pressure on pension providers to consolidate, triggering the recent announcement of a merger between Just Retirement (LSE: JRG.L - news) and Partnership Assurance.
Moody's, the ratings agency, warned last year that companies such as Aegon and Scottish Widows are "vulnerable to margin pressures" because they lack a "differentiating asset management proposition".
A Rothesay spokesman declined to comment on Friday.
Rothesay's main rivals include Pension Insurance Corporation, which Sky News revealed this month is in talks with China's Legend Holdings - among other investors - about a capital injection of around £300m.
PIC insures approximately 130,000 pensioners through the schemes it has struck deals with, which include blue-chip companies such as the London Stock Exchange Group, EMI, Cadbury and Honda.
Among the current PIC investors likely to sell their shareholdings is the taxpayer-backed Royal Bank of Scotland (LSE: RBS.L - news) , which dates back to the period before it was bailed out by the Government in 2008.
