Three funds including a Singaporean sovereign wealth fund have agreed to acquire a combined 64% stake in Rothesay Life from Goldman Sachs.
Subject to regulatory approval, funds managed by private equity giant Blackstone and sovereign wealth fund GIC will each take a 28.5% equity stake in the bulk annuity insurer.
Massachusetts Mutual Life Insurance Company (MassMutual) will buy 7% of the company, leaving Goldman as the largest shareholder with a 36% stake.
Rothesay Life chief executive Addy Loudiadis said: "We are delighted that three substantial investors have chosen Rothesay Life as their vehicle for investing in the UK pensions de-risking market.
"Since establishing the business in 2007, we have built Rothesay Life steadily with a focus on pricing discipline and risk management."
The insurer was established as a wholly owned subsidiary of Goldman, but now operates as a standalone business and has written more than £12bn in bulk annuity contracts.
Loudiadis said that the deal, which diversifies the firm's shareholder base, was the next step in its development.
The Goldman Sachs Group vice chairman Michael Sherwood said: "Rothesay Life's success has now brought it to a size at which it is more capital-efficient for Goldman Sachs to share its ownership with other investors."
The investment comes after fellow bulk insurance specialist Pension Insurance Corporation (PIC) raised £400m in private equity capital (PP Online, 4 July 2012) and amid rumours that it is mulling a stock market flotation (PP Online, 7 October).
Head of Blackstone's Tactical Opportunities Europe Fund Chad Pike said: "We have been following developments in the UK pension insurance market for some time and anticipate significant growth potential as interest rates continue to rise."
FIC Special Investments president Tay Lim Hock said the investment underscored the fund's confidence in Rothesay's management team and business model.
MassMutual executive vice president and chief investment officer M. Timothy Corbett said: "Demand for risk management from UK defined benefit pension schemes offers significant growth opportunities, and our on-going investment in Rothesay Life supports our view that the company is well-positioned to capitalise on this opportunity."
Commenting on the deal Hymans Robertson partner and head of buyout James Mullins said it illustrated the success of the UK bulk annuity market over the last six years.
He said: "The fact that Goldman Sachs looks to have secured these investors so quickly shows how much interest there is in the UK pension scheme risk transfer market.
"This can only be good news for pension schemes looking to transfer their risk to insurance companies. Indeed, our clients are continuing to see some very competitive pricing for buy-ins and longevity swaps."
The number of defined benefit (DB) scheme members with benefits protected by an insurer will double by the middle of the decade, according to Lane Clark & Peacock (LCP).
Aviva Life & Pensions has concluded an £875m buy-in with its own staff pension scheme, following on from a similar transaction last year.
Just Group has completed a £74m pensioner buy-in with the UK pension scheme of a US-listed engineering business.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.