Tuesday 22 August 2017

IL&P bidders given 'early October' deadline

INSURANCE

Joe Brennan and Laura Noonan

FAILED EBS bidder JC Flowers and local player Canada Life Ireland are among five bidders fighting it out to buy Irish Life & Permanent's massive life insurance business.

Sources last night confirmed that the duo, along with other potential buyers, had been invited to make final bids for Irish Life Assurance (ILA) by "early October".

The news comes six weeks after Deutsche Bank sent out an 'information memorandum' to about 20 prospective bidders for the country's biggest life insurance player.

Nationalised IL&P is being forced to sell off the life insurance arm to make a contribution to a €4bn capital demand triggered by potential losses at banking arm Permanent TSB.

All parties involved in the sales process have signed 'non-disclose agreements', but three sources with knowledge of the process have confirmed details of several prominent bidders.

JC Flowers has teamed up with Apollo Global Management LLC, another private equity firm, to make a joint bid, said the sources.

London-based CVC Capital Partners, Great-West Lifeco Canada Life Ireland, US insurers Unum Group and Delphi Financial Group are among the other bidders being given additional information ahead of the October deadline.

Swiss giant

Swiss insurance giant Zurich, which is understood to have been among the initial 20 parties to receive information on the ILA sale, is not one of the final five.

Earlier this week, Zurich Ireland boss Anthony Brennan told the Irish Independent that his "preference" was for organic growth but declined to comment further.

The early October deadline for second bids means that would-be buyers will have to have their offers in before the Government's Budget in December, which could include new plans on pension taxes.

Some industry sources suggest that these tax changes, which may include reducing pension tax relief from the marginal rate to the standard rate, could have a material impact on the sale price.

IL&P is understood not to be overly concerned about the changes to the pension tax regime, and sources downplayed suggestions that the sale might have to be delayed until there was clarity around the issue.

ILA was initially earmarked for sale in July, before the deadline was pushed out until October. The most recent version of the Government's "memorandum of understanding" with the bailout partners includes no sale date for the life insurer.

It is understood that the Government may have flexibility to postpone the sale until the end of the year, but that the bailout partners will insist on IL&P getting more state cash if the sale isn't completed by January 1.

IL&P received an extra €2.9bn in capital at the end of July -- and the PLC needs to raise €1.1bn from the ILA sale and a buyback of debt instruments to hit the targets imposed by May's stress tests. (Additional reporting, Bloomberg)

Irish Independent

Also in Business