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By Benjamin Robertson and Lucca De Paoli
Private equity and credit firms have elbowed their way into everything from real estate to corporate lending. Now they’re cracking open Britain’s growing pension-transfer market.
A partner of U.S. buyout giant TPG and Disruptive Capital Finance, TPG partner is among firms backing new pension superfunds Debut transfer deals may soon be cleared by U.K. regulator owned by the Truell family office, are backing so-called superfunds that are poised to enter the business of taking over costly pension funds from companies struggling to keep them going. Insurers, which dominate the market, are expected to do more than 30 billion pounds ($38.7 billion) of transfer deals this year, according to consultants Lane Clark & Peacock.
Investors desperate for yield in the world of negative interest rates are increasingly turning to private equity firms in search of returns. This has fueled the PE industry’s expansion beyond the leveraged-buyout deals that remain their stock-in-trade. In the U.K., superfunds are awaiting approval of their debut deals from a regulator that’s pushing for consolidation.
U.K. companies have spent the last few decades trying to rein in their pension costs, which have soared as employees live longer, regulation tightens and returns on traditional investments such as bonds decline. This applies particularly to direct-benefit programs that promise employees regular payments or a lump-sum payoff when they retire. While few firms offer these plans any longer, they have to shoulder the cost as long as existing pensions remain on their books.
In the current market, companies can buy so-called bulk annuity policies from insurance companies such as Legal & General Group Plc and Rothesay Life Plc. Under these policies, insurers acquire the pension fund’s assets as well as the obligation to make pension payments to its members. These so-called buy-out deals are costly, however. Walmart Inc. will incur a pretax charge to earnings of about $2.2 billion as part of its plan to offload a retirement plan for employees of its British subsidiary Asda to Rothesay Life.
Private equity firms have a piece of this action through their investment in insurers such as Rothesay Life, which counts Blackstone Group Inc. and Singapore’s sovereign wealth fund GIC Pte among its backers. Now they’ve set their sights on the struggling pension funds that can’t afford insurance.
That’s where the superfunds come in. They argue that because they don’t face the costly capital requirements imposed on insurers, they can consolidate and manage pension plans at lower cost and generate better returns. The U.K. government supports the emergence of superfunds, which it says could improve funding for many pension programs as well as their investing power and governance.
“There is huge scope for consolidation,” said Adam Saron, founder of Clara-Pensions Ltd., a consolidator backed by private credit investor TPG Sixth Street Partners. The firm’s first deal, a transfer involving less than 100 million pounds of assets, should receive the regulator’s blessing early next year, and more are in the pipeline, he said.
The Pension SuperFund, backed by Disruptive Capital, expects clearance of its first deal as soon as this month, and several billion pounds of potential transfers are in the works, according to Managing Director Antony Barker.
Edmund Truell, a founder of Disruptive Capital, said the regulator’s support for superfunds is a key part of their appeal to investors. He makes the case that firms like his have the investing chops and financial backing to turn things around for the “vast majority” of ailing pension funds that may never be able to afford insurance and are too small to save themselves.
The U.K. government’s support isn’t unequivocal, however. It also warns of “clear risks” in allowing superfunds to set up shop without new regulations to protect retirees, and has proposed measures to prevent these companies from undermining insurers by doing transfer deals with pension funds that can afford a buy-out. The government issued its proposal nearly a year ago, but hasn’t yet presented draft legislation to Parliament.
Global Interconnection Group (GIG) is delighted to have signed an exclusivity agreement with a major UK energy company to explore collaboration on the Atlantic SuperConnection interconnection project.
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Pension SuperFund Capital, which oversees UK commercial pension consolidator Pension SuperFund, has reached an agreement to acquire the parent group of Options Pensions, STM Group, for £35.6m.
The purchase was made through the Pension SuperFund Capital acquisition arm Bidco. It is expected that if the full value is delivered by the deferred consideration units (DCU), the acquisition value could rise to £39.8m, it was announced this morning.
The scheme shareholders will also be entitled to receive 60 pence per share in cash, rising to 67 pence per share if full value is delivered by DCU.
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ViroCell’s manufacturing operations are housed within Great Ormond Street Hospital’s state-of-the-art GMP accredited unit for manufacturing cell and gene therapies, the Zayed Centre for Research
London, UK and New York, US, 1 November 2023 – ViroCell Biologics (“ViroCell” or the “Company”), a specialist contract development and manufacturing organisation (“CDMO”) for cell and gene therapy (CGT) clinical trials, announces that the Company is now able to manufacture and globally export viral vectors from Great Ormond Street Hospital’s (GOSH) state-of-the-art manufacturing facility, the Zayed Centre for Research, for use in clinical trials. This follows the grant of a Manufacturer’s Authorisation License (MIA) to GOSH to manufacture viral vectors by the UK’s Medicines and Healthcare products Regulatory Agency’s (MHRA).
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An experienced team of Private Markets analytics specialists supporting the industry renowned work of Professor Oliver Gottschalg of HEC Paris is delighted to announce the launch of Gottschalg Analytics as an independent second-generation provider of performance intelligence services for the Private Markets.
Pension Insurance Corporation Group Limited1 ('PICG' or the 'Company'), ultimate parent company of Pension Insurance Corporation plc ('PIC'), the specialist insurer of UK defined benefit pension schemes, today announces its final results for the 12 months to 31 December 2022.
DCAC announced proposals to form the Advanced Cables Business Combination in the press release issued by the Company on 20th February 2023. The DCAC Board has now decided to expedite the proposals, and DCAC has therefore agreed an exclusive option to acquire the holding company of Advanced Cables, Global InterConnection Group SA (“GIG” or the “Target”). Besides Advanced Cables, GIG is also the holding company of ASC Energy Limited. It is intended that DCAC will be renamed "Global InterConnection Group Limited" on completion of the Business Combination.