GIC, Blackstone up stake in UK pension provider

Singapore sovereign wealth fund GIC and Blackstone are acquiring Goldman Sachs’ shareholding in Rothesay Life.

The Government of Singapore Investment Corporation, Blackstone, and Massachusetts Mutual Life Insurance Company have agreed to purchase Goldman Sachs’ entire 32.7 percent interest in UK-based pensions provider Rothesay Life.

GIC and Blackstone will become the largest shareholders in Rothesay Life once the transaction is completed in the fourth quarter of 2017, while Mass Mutual will increase its stake substantially in the pension provider, the firms said in a statement. The investors, however, did not say how big their shareholding would be.

Previously GIC and Blackstone each owned 28.5 percent of the insurer. MassMutual had a 7 percent stake.

Blackstone invested from its tactical opportunities platform, for which it has raised $3.7 billion for its second vehicle.

Rothesay, which was established in 2007 by Goldman Sachs, helps companies to shed the risks associated with their pension scheme liabilities. Its assets under management management have grown to £23.7 billion ($30.9 billion; €26.3 billion) as of the end of 2016, from £7.5 billion in 2013. Rothesay’s clients include the pension schemes of British Airways, InterContinental Hotels, General Motors and Philips.

Choo Yong Cheen, chief investment officer of private equity at GIC, said in a statement the investor likes the company’s strong growth prospects driven by the increasing demand for annuity risk transfer solutions.

Insurance companies have been increasingly attracting capital from private equity investors as they continue to unload their annuity businesses due to low interest rates. More than half of M&A transactions in the insurance industry in 2015 and 2016 involved private equity investment, according to a report from insurance consultancy Optis Partners.