An Asian sovereign wealth fund and American insurance giant are to pay Goldman Sachs hundreds of millions of pounds for its stake in Rothesay Life, the UK pensions buyout firm it founded a decade ago.
Sky News has learnt that the Government Investment Corporation of Singapore (GIC), MassMutual and Blackstone, the private equity giant, will announce a deal early next week to buy Goldman’s 33% stake in Rothesay.
The transaction is expected to value Rothesay at about £2bn, although that figure is not expected to be disclosed, according to a source close to one of the shareholders.
Rothesay is one of a cluster of specialist pension firms which have emerged over the last 15 years, insuring tens of billions of pounds of liabilities for companies such as British Airways, General Motors and InterContinental Hotels.
Goldman built the business from scratch but began reducing its stake in 2013, largely because of the onerous capital burden it was forced to carry in order to protect the interests of Rothesay’s policy-holders.
Next week’s sale will represent the concluding phase of that selldown, marking the end of what sources described as a “very successful” investment for the Wall Street bank.
Rothesay has grown steadily since its launch in 2007, but has also bulked up through a number of big acquisitions.
Last year, it acquired £6bn of pension liabilities from Aegon, the Dutch insurer a deal also motivated by regulatory reforms, with Europe’s new Solvency-II regime spurring insurance companies to offload some capital-intensive activities.
Rothesay is now responsible for paying retirement benefits to more than 400,000 people and as of April this year, managed assets worth £23.7bn.
The company has been tipped to float on the London Stock Exchange, but is not thought to have immediate plans to do so.
“The bulk annuity and pension buy-out markets continue to present a significant structural growth opportunity,” Ray King, Rothesay’s chairman, said earlier this year.
“We expect the high-profile challenges for defined benefit pension schemes highlighted over the past 12 months combined with a backdrop of rising interest rates are likely to make these transactions more attractive to companies as they look to remove pension risk.”
The sale of Goldman’s stake to its trio of fellow shareholders will come at an intriguing time in the UK pensions market, with the combined Standard Life and Aberdeen Asset Management expected to offload billions of pounds of assets after their merger completes in the autumn.
Prudential, the FTSE-100 insurer, was reported by The Times this week to be preparing to put £10bn of its UK annuities book up for sale a package that Rothesay would be among the bidders for.
One source said that Rothesay would be interested in a much larger chunk of the Pru’s UK assets if they were available.
Spokesmen for Blackstone, Goldman and Rothesay declined to comment on Friday.