European private equity firm, Cinven, has reached an agreement to acquire Partnership Assurance (PA or Company) from Phoenix Equity Partners for a total consideration of around 200 million.
PA is one of the UKs leading specialist providers of retirement solutions. These include impaired and enhanced annuities, long-term care plans and life cover. The markets in which PA operates are expected to show significant future growth resulting from the combination of the rapid migration to defined contribution schemes and demographic trends as well as regulatory developments driving fairer pricing of annuities in the UK. These developments include the promotion of the use of the Open Market Option for annuity purchases. This is raising awareness of the benefits of enhanced and impaired annuities which deliver significantly enhanced annual incomes for customers.
Partnership Assurance is the longest established operator in this segment of the market and through ownership of its proprietary intellectual property and data, is able to provide customers with annuities at highly attractive rates. Cinven expects to make significant investment in the staff, brand, infrastructure and distribution channels in order to drive long term value from this high growth segment of the financial services market. The Company has achieved 70% CAGR in revenue over the past 2 years.
The transaction is subject to certain conditions including ECMR anti-trust clearance and approval of the UK Financial Services Authority.
Through our strong sector focus and fundamental research, we are delighted to have found a market-leading business, with unique intellectual property and a strong management team, which delivers a very attractive proposition for its customers. Cinven is investing fresh equity in Partnerships staff, brand, infrastructure and distribution channels to take advantage of the significant growth opportunities available in the market, says Peter Catterall, partner, Cinven.
This segment of the financial services market is set to grow rapidly driven by some very powerful secular trends such as the switch to defined contribution pension schemes, changing demographics and encouraging regulatory developments, says Caspar Berendsen, partner, Cinven.
The management team at Partnership Assurance has worked hard to build a market leading business that has created a niche in providing retirement solutions to those in the UK with health conditions. We believe this transaction represents a wonderful opportunity for the business and all our staff and puts us in a position to accelerate the businesss growth and we are delighted to welcome Cinven as our majority shareholder. They have a strong track record of investing in and building businesses and we look forward to working with them to achieve our plans, says Ian Owen, chairman, Partnership Assurance.