independent

Wednesday 23 April 2014

Government expects to sell Irish Life before the end of next month

THE Government expects to sell Irish Life to a Canadian firm before the end of February, as negotiations on the deal accelerate.

Speaking yesterday, Minister of State for Finance Brian Hayes said he believed a deal to sell the pensions and assurance business to the Canadian firm Great West – which owns Canada Life – could be completed "within the next month".

"Those negotiations are ongoing but we hope to bring them to a conclusion in the coming weeks," he said.

When pressed for a specific timeframe, he added it would be "within the next month".

Mr Hayes's comments are the first time a government representative has given a concrete timeframe for when it expects the sale to go through. On Sunday, Transport Minister Leo Varadkar said he expected a deal "in the coming weeks".

Getting Irish Life back in private hands is considered a key test of international confidence in Ireland.

The State paid Permanent TSB €1.3bn for Irish Life in November 2011 after a deal to sell the company to Canada Life fell through at the 11th hour as the euro crisis worsened.

The Government's decision to nationalise the country's largest pension company worried troika officials at the time. They were already concerned about the State's dominance within the financial services sector.

Since then the immediate future of the euro has become less of a concern and international markets have been relatively calm, raising hopes that Irish Life could leave state ownership sooner rather than later.

Earlier this month it emerged that company chief executive Kevin Murphy had postponed his planned retirement until after a deal is done to sell the company.

Last September, Irish Life revealed a strong set of annual results but warned it was unlikely to leave public ownership any time soon.

"Most of our potential buyers are based in North America and there is a sense that potential investors need to see three to six months of sustained positive news on the eurozone crisis," Mr Murphy said at the time.

"When we aborted the previous sale, the American view was that the eurozone was going to break up and Ireland could be kicked out of it. Obviously that has changed since then," he added. Now, nearly five months later, it appears the climate in Europe has eased enough for investors to take another look at the business.

Talks are believed to have resumed in December, while the US private equity firm JC Flowers and investment fund Apollo are also thought to have contacted the Government about Irish Life in recent months. Both were underbidders during the first effort to sell the company 15 months ago.

If a deal is to be completed, it is thought the Government will at a minimum have to get back its €1.3bn investment in Irish Life, which has valuable tie-ins with AIB and Ulster Bank.

A spokesman for Irish Life declined to comment.

Irish Independent

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