IL&P advisers explore sale of life assurance arm and stock market move
Published 11/05/2011 | 05:00
IRISH Life & Permanent has asked advisers Deutsche Bank to "explore" a trade sale of its life assurance business as well as a much-mooted stock market floatation, a spokesman confirmed last night.
The spokesman stressed that IL&P is still hoping to do a deal by July, even though the Government has now given the bancassurer until October to offload Irish Life Assurance (ILA).
In the aftermath of the latest banking stress tests, IL&P executives spoke of plans to float the life insurance unit to help it raise the extra €4bn in capital demanded by the regulator.
But a spokesman last night said that Deutsche Bank, which has just been appointed to advise IL&P, will examine both a trade sale and stock market flotation.
"The objective is to raise the most amount of money in order to minimise the amount of capital required," he stressed.
The life business has an embedded value of about €1.7bn, and may be worth more if it takes over the Quinn Healthcare franchise.
Market sources stress that the actual price achieved could be below this, pointing to difficult conditions and the tough economic outlook. Yesterday's pension levy revelations could also weigh on any deal.
IL&P executives had originally cited plans to move on ILA "over the summer", but a document recently released by the Department of Finance shows the firm has been given until October to do a deal.
A spokesman for IL&P last night insisted that the Department of Finance dispatches did not mean that the Irish Life Assurance sale had been "delayed".
"The document states that the ILA must be offered for sale before end of October," the spokesman added.
"Plans are continuing for the sale process and we are happy with the preparations being made. We are not committed to a specific date for this exercise but we are making preparations to facilitate a sale from July."
Once ILA is sold, the remaining IL&P business is expected to fall into majority state ownership.
That multi-billion capital contribution from the state will all but wipe-out IL&P's existing shareholders, whose stakes were valued at less than €40m when markets closed last night.
Shareholders are expected to vent their frustration at developments at Permanent TSB's upcoming AGM next Wednesday, but the sale of ILA will not be put to a vote until a later date.