UK - Pension Corporation has confirmed it is implementing a second round of equity fund raising with the aim of reaching £400m (€477m) to fund a pipeline of buyout business.
The firm said it had already received a £60m injection - equivalent to 15% of its target - from JP Morgan, one of its existing shareholders, and plans to offer the fundraising to its existing shareholders first - including JC Flowers, Royal Bank of Scotland (RBS) and Swiss Re.
Pension Corporation, which offers buyout solutions through its subsidiary Pension Insurance Corporation (PIC), confirmed as part of the agreement with JP Morgan the firm will acquire the "assets and key members of Synesis Life", a specialist UK bulk annuity provider whose shareholders also included JP Morgan and RBS.
The fundraising has been organised to improve the firm's ability to "meet the fast-growing pipeline of pension enquiries", which is valued at more than £100bn across the range of solutions including the longevity risk insurance. (See earlier IPE article: PIC launches DB longevity insurance)
Once the fundraising has been offered to existing shareholders, it will be extended to other investors with the aim of closing the transaction in the first half of 2009.
Edmund Truell, chief executive of Pension Corporation, said: "The pension risk transfer market is growing rapidly. The extra capital we are raising, led by JP Morgan, will extend our capacity to take market share in areas with the right balance of risk and reward".
Meanwhile, Edward Giera, managing director of the pension advisory group at JP Morgan, said: "The significant range and complexity of the challenges facing UK defined benefit pension funds requires a variety of solutions, and the combination of Pension Corporation with the Synesis Life team will create a powerful force in the UK market."
It is understood Pension Corporation and Synesis Life had agreed a buyout deal as early as July, following the failure by Synesis to complete any transactions since its establishment in 2006, although this is the first official confirmation of the deal. (See earlier IPE article: Private equity may trigger buyout consolidation)
Pension Corporation completed its first buyout of a pension scheme in May 2008, when it acquired the Swan Hill pension fund, although since then it has also agreed a deal with the UK Can pension plan. (See earlier IPE articles: Swan Hill marks first PIC buyout and PIC agrees buyout of scheme in PPF assessment)
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