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CVC Eyes Takeover Of Rival Cinven's Guardian

CVC Eyes Takeover Of Rival Cinven's Guardian

The largest investor in Formula One (F1) motor racing has made an approach to buy Guardian Financial Services, one of the UK's largest privately owned life insurance policy-owners.

Sky News has learnt that CVC Capital Partners is attempting to acquire Guardian from Cinven, the company's existing private equity owner.

Discussions are understood to have taken place between the two sides, although it was unclear on Friday how realistic was the prospect of an agreed deal between them.

As of last July, Guardian managed roughly £17bn in assets on behalf of 900,000 customers in the UK and Ireland.

CVC is interested in a takeover of Guardian in order to use it as a platform to consolidate other owners of closed-ended life insurance policies, according to sources in the private equity industry.

Its approach comes amid a shake-up in the annuities sector and other parts of the UK's life insurance and pensions industry following reforms announced by George Osborne, the Chancellor, in his Budget last year.

Annuities had effectively been mandatory for people with defined contribution pension schemes because of the tax implications, but the Government's changes to the rules will give consumers greater flexibility.

If a deal involving Guardian does take place, it would offer further evidence that an anticipated wave of takeovers in the sector is materialising.

Aviva is in the process of sealing a £5.2bn takeover of Friends Life, while Phoenix and Admin Re, two other players in the sector, held abortive merger talks in 2013.

Both CVC and Cinven have been prolific investors in the financial services sector.

The latter was among the first buyout firms to have a team dedicated to the sector team when it was established in 2006.

Its investment in Partnership Assurance, which is now publicly listed, has generated a return of three times Cinven's initial investment.

It is also undertaking a similar approach to insurance consolidation in Germany through a company called Heidelberger Leben.

Cinven bought Guardian towards the end of 2011 for £275m from Aegon, the Dutch financial services group, and has since made a series of further bolt-on acquisitions.

Those takeovers included Ark Life, which was sold by AIB in Ireland in December 2013, and two deals with Phoenix.

The share prices of listed annuities providers, such as Partnership and Just Retirement, have slid since Mr Osborne's announcement last March.

It is not clear what valuation the talks between CVC, which is the biggest shareholder in F1, and Cinven are attributing to Guardian.

Last October, Guardian said the "financial profile of closed life funds is attractive...due to their highly visible and very stable long-term cashflows and the potential for attractive returns on equity".

In 2012, CVC walked away from a takeover of Phoenix after weeks of talks, but insiders confirmed its ongoing interest in the sector.

The investment firm has also owned UK insurers including Brit and a stake in Saga, which has a large financial services business.

Cinven and CVC both declined to comment on Friday.