UK - Goldman Sachs' Rothesay Life has agreed to buy out the £700m (US$1389m) Rank Group Pension Scheme, in the biggest deal of its kind to date.
The deal worked in two stages. Rank effectively sold the scheme and transferred its risk to Rothesay Life immediately. The buyout vehicle then bought a bulk annuity to cover the scheme.
David Ellis, principal, Mercer, who worked for plan trustees explained the deal: "By Rothesay Life taking on all the risk instantly, Rank had to pay more than it may have done for another type of deal.
"Unlike the traditional buyout structure, Rank was assured a price from the outset and not when the buyout company had transferred the risk over a number of weeks, during which time things could have changed."
Peter Gill, finance director, Rank, commented: "This transfer is the result of an extensive review that included consideration of several options and discussions with a number of interested parties."
The company began negotiations for this deal some nine months ago.
Mike Samuel, chairman of trustees, continued: "We believe that their model, backed by Goldman Sachs' strength and financial expertise, will provide a high level of security for scheme benefits and also an excellent administrative service for the 19,000 members."
Addy Loudiadis, chief executive, Rothesay Life, said he believed the buyout market was increasing rapidly as companies and trustees looked for solutions to transfer their pension liabilities.
Ellis at Mercer concluded companies with larger pension schemes had become increasingly interested in buyouts but these would be slower to come to fruition as their decision process would take longer.
He did comment, however, that deals such as this proved there was sufficient market capacity for these deals to complete.
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