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L&G eyes high-earner pensions in Suffolk Life takeover

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  • L&G eyes high-earner pensions in Suffolk Life takeover

UK - Legal & General (L&G) plans to target the UK's "mass affluent" and high-net-worth end of the pensions market, through the £62m (€80m) acquisition of Suffolk Life.

Suffolk Life, a specialist provider of self-invested personal pensions (Sipps), has recommended the cash offer of £15.75 a share from Legal & General Retail Investments (LGRI).

Under the terms of the offer, which still requires regulatory approval form the Financial Services Authority (FSA), the subsidiary of L&G will acquire the entire issued and to be issued share capital of Suffolk Life for £62m.

L&G, which has £297bn funds under management, claimed the acquisition would provide the firm with "specific know-how in relation to Sipps" which it described as "an increasingly important product in the long-term savings market". 

The move follows the publication of the insurer's 2007 annual results, which revealed although pension sales had increased by 20%, particularly in its core areas of individual and corporate pensions, it believes growth in the savings market is being driven by an "increasing number of mass affluent and high-net-worth clients".

Tim Breedon, group chief executive of L&G, said the acquisition of Suffolk Life would enable it to "accelerate" its growth in these "key expanding markets".

"Growing our savings business is a strategic priority for L&G. Pensions and the mass affluent market are areas we have targeted for development," he added.

Henry Catchpole, chief executive of Suffolk Life, revealed the Sipp provider had agreed to the deal after a strategic review confirmed access to a distribution platform, such as L&G's, would help speed up the firm's growth and development.

"Whilst the development of the pensions landscape has presented Suffolk Life with attractive opportunities to grow profitably, Suffolk Life's development could be accelerated through being part of a larger group which offered clear distribution synergies," added Catchpole.

As a result, the directors of Suffolk Life, which was advised by Fenchurch Advisory Partners, voted unanimously to accept the offer and to recommend the deal to remaining shareholders, although certain shareholders, including the directors, have already made "irrevocable" commitments to sell their shares - totalling 52.1% of the total capital - to L&G.

Under the terms of the offer, existing employment rights will be safeguarded, although Suffolk Life, which has £2.7bn assets under administration, has agreed to pay L&G a fee of 1% of the offer value if it withdraws from the offer, and also undertaken not to "solicit competing proposals".

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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