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Cinven buys insurer from Lloyds in all-equity deal

The London-based GP has invested €300m in Heidelberger Leben as it aims to replicate the success of its Guardian Financial Services deal.

Cinven is bolstering its financial services portfolio with the purchase of an 80 percent stake in Heidelberger Leben, a German provider of retirement and life insurance products. 

In an all-equity deal, the European-focused firm will invest €300 million into the business, which is headquartered in the German town of Heidelberg and employs around 300 people. 

Cinven had already had its eye on the business two years ago, when Lloyds first tried to sell it, Caspar Berendsen, a partner at Cinven, told Private Equity International

“At that point, their [auction] process didn’t lead to anything for various reasons. At that time, we were also buying Guardian [Financial Services] so it was very difficult for us to buy both businesses at the same time,” he said. However, Cinven recently went back to Lloyds and entered into exclusive talks, completing the deal in approximately four months, he added. 

The deal has a lot of resemblance to Cinven’s investment in Guardian Financial Services, a UK provider of life and pension products, which it acquired in November 2011, Berendsen said. “In the last two years [Guardian] has been extremely successful. From our perspective it is easier to copy a successful investment than to find a totally new story,” Berendsen said. 

The most attractive market to do that in was Germany, he said. “It’s a very large market and it’s very fragmented. We are also seeing regulatory issues coming into play so a lot of people [are] disposing of life insurance businesses. Heidelberger is the ideal starting point to create this consolidation company in Germany.” 

Cinven also recently floated Partnership on the London Stock Exchange, which generated a total return of more than 8x. 

The investment in Heidelberger Leben was made from Cinven’s Fifth Fund, a €5.3 billion vehicle which closed in June. The vehicle is understood to be nearly 30 percent deployed.