Phoenix books 4.5x on sale to Partners Group

Part of the capital for the acquisition of Key Retirement Group will come from Partners Group Direct Investment 2016, which is seeking €2 billion.

UK mid-market private equity firm Phoenix Equity Partners has agreed to sell Key Retirement Group (KRG) to Partners Group in a deal valuing the business at £208 million ($263 million; €247 million), according to a statement from the firm.

The sale, which is subject to clearance by regulatory authorities, is set to generate a return of around 4.5x for investors in Phoenix’s 2010 Fund, which closed on £450 million.

Headquartered in Preston, UK, KRG provides advice and financial products to retirees and those approaching retirement, specialising in originating and distributing lifetime mortgages on behalf of third-party funders, which allow customers to release equity from their homes. In 2016 KRG advised around 9,000 customers, providing around £530 million in lifetime mortgages, according to a statement from Partners Group.

It is understood that Partners Group will make the investment from several of its funds, including an allocation from Partners Group Direct Investments 2016, which is currently in market seeking €2 billion, according to PEI data, as well as from client mandates.

Following the acquisition, Partners Group will work with KRG's management team, led by CEO-designate Simon Thompson, on value creation initiatives to expand the company’s distribution capacity, drive forward product innovation and broaden its product portfolio.

Phoenix will be keen to return capital to its investors as it continues to seek around £500 million for its latest fund. It is understood the firm held a £250 million first close on the vehicle in the first quarter of 2016.

The firm has already started investing Phoenix Equity Partners 2016, acquiring UK online holiday lettings platform The Travel Chapter Group, Rayner Surgical Group, a developer and manufacturer of ophthalmic implants and pharmaceuticals, and parcel and carrier management services provider Global Freight Solutions.