Deutsche backs new UK pensions buyout firm
UK – Deutsche Bank has emerged as one of the backers who have put up £500m (€720m) into former Prudential UK head Mark Wood’s new defined benefit pension buyout venture.
Also involved in the venture are former Financial Services Authority chairman Sir Howard Davies and former Institute of Actuaries president Jeremy Goford.
Wood’s Paternoster Ltd. company was set up to acquire defined benefit pension schemes from UK companies. It said today it has secured the equity financing from a consortium led by Deutsche and hedge fund Eton Park International LLP.
“This is an exciting opportunity for Deutsche Bank and Paternoster at a seminal moment in the UK pension industry's evolution,” said Deutsche’s global markets head Anshu Jain. “This plays to our recognised strengths of client orientation and innovative solutions. "
Paternoster, once it gets FSA approval, would meet demand from companies and trustees to transfer their DB pension liabilities to an FSA-regulated insurance company.
“Companies and trustees will thereby be freed from ongoing exposures to longevity and investment risks in their pension funds, whilst pensioners will benefit from having their pensions managed by a well-capitalised and regulated specialist,” it said.
Wood believes there is growing demand from UK companies to remove defined benefit pension obligations from their balance sheets as additional pressure builds on them to recognise and manage volatile deficits.
This was “being driven by a number of factors including the recent empowerment of the Pensions Regulator, the establishment of the Pension Protection Fund and pressure to increase disclosure in relation to pension fund obligations in company accounts”.
Paternoster’s non-executive directors will include Davies, Goford, a former senior principal of Tillinghast Towers Perrin, and Lord Leitch, the former chief executive of Zurich’s UK operations.
“We are delighted to have successfully completed our fundraising and by the positive market reception we have received,” Wood said.
Paternoster was advised by broking firm Numis, which will continue to be a shareholder, and Hawkpoint.