F1 owner CVC tables offer for stake in pension buyout giant PIC

The largest shareholder in Formula One (F1) motor racing has launched an attempt to buy a slice of the insurer of pension schemes at Cadbury, Siemens (BSE: SIEMENS.BO - news) and ICI.

Sky News has learnt that CVC Capital Partners has approached shareholders in Pension Insurance Corporation (PIC) to persuade them to sell their stakes in the business.

The approach from CVC (Taiwan OTC: 4744.TWO - news) is said to value PIC - one of a crop of specialist pension buyout firms - at close to £2bn.

Sources said that a deal between the two sides, likely to involve CVC acquiring between 10% and 20% of PIC, is at an advanced stage and was likely to be announced in the new year.

If completed, CVC, which is in the process of reducing its interest in F1 following a takeover announced in the autumn, will buy the stake through its Strategic Opportunities Fund, which focuses on longer-term, lower-return investments.

Royal Bank of Scotland (LSE: RBS.L - news) is thought to be among the PIC shareholders willing to offload its remaining stake.

A deal would come just weeks after PIC raised £250m in subordinated debt in anticipation of new investment opportunities.

Earlier this year, Legend Holdings, which part-owns the Chinese personal computing group Lenovo, bought a big stake in PIC, which is expected to consider a stock market listing in the next couple of years.

CVC participated in that process in a bid to buy a stake in the company, but was unsuccessful.

PIC specialises in insuring third parties' corporate pension schemes and taking on responsibility for making retirement payments to their members.

The company insures more than 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.

The pension buyout industry has grown rapidly during the last decade as companies have sought to find ways of managing the longevity risk embedded in their defined benefit pension schemes.

The number of trustees looking to do so in the UK has increased this year amid public controversies over the pension deficits at companies such as BHS, where shortfalls have grown as a consequence of ultra-low interest rates.

PIC's other shareholders include JC Flowers, the private equity firm, and Reinet, a Luxembourg-based investor.

PIC and CVC declined to comment.