Langholm increases company’s value by £400m in two years

Langholm Capital, a mid-market independent private equity firm, has completed the initial public offering of Just Retirement, a UK life assurance group, valuing the business at £422 million (€627 million; $835 million). 

Just Retirement: increased value by £400m in two years

The buyout firm has sold about 25 percent of its shareholding for just under £25 million, covering the cost of its original investment of £24.5 million, made in August 2004.

Langholm’s remaining stake of a little over 60 percent is worth more than £300 million.

Just Retirement has raised an initial £87 million (€74.3 million; $99 million) through a placing of new shares on AIM. £50 million is being reinvested in the company, the remainder is to be paid to Langholm and the management team.

Langholm Capital invested in Just Retirement as part of an overall £60 million funding package, which included £35 million of reinsurance finance from German insurance firm Hannover Re and Interpolis, an insurance subsidiary of Dutch Rabobank.

A spokeswoman said: “The initial public offering will provide funds to support the further development of the company and raise the profile of the client base.  Langholm will expand Just Retirement’s distribution channels.  The company now sells through independent financial advisors but plans to carry out more direct sales.”

A greenshoe option raised a further £13 million for the company. 

Just Retirement applied for AIM last month and unconditional trading in the shares on begins today. 

Deutsche Bank is the sole global co-ordinator, book runner, nominated adviser and broker in connection with the admission.  Fox-Pitt, Kelton is the co-lead manager.

The retirement sector is a growing market.  The total UK annuity market was worth £7.9 billion in the year to 31 December 2005, according to the Association of British Insurers, having shown compound annual growth of 6 per cent since 2000. 

Just Retirement was established in 2004 by current chief executive Mike Fuller, and the senior management team, with financial backing from Langholm Capital.  The company reported total sales of £297.9 million in the year to 30 June 2006, its second year of operation.

Its management team includes previous senior management from Aviva, Bradford & Bingley, Barclays Canada Life, Nationwide Building Society, Stalwart Assurance and GE Life.