Cinven buys Guardian from Aegon

John Bakie
16 August 2011

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Cinven has acquired UK life and pensions provider Guardian Financial Services from Aegon for ТЃ275m.

Guardian is closed to new business, a so-called "zombie fund", but has around £7.4bn in assets under management from existing policies. It is thought Aegon has an agreement with Cinven to continue managing Guardian's assets.

Cinven says closed life books offer an attractive investment as they enjoy robust, long-term cash flows, limited risks and good return prospects. Cinven says it plans to further de-risk the business and increase efficiency to generate value.

The investor is looking to acquire other closed UK life books in the coming years as it is anticipated that a number of financial services providers will look to divest these assets, providing consolidation opportunities. Clive Cowdery's first Resolution vehicle undertook a similar project in the past, though Cinven says its own project will involve more integration of the acquired companies to increase value through improved efficiency.

The transaction is expected to formally complete in the fourth quarter of 2011 and is subject to regulatory approval.

Debt
An investment grade debt package was provided by Lloyds. The debt ratio is said to be "conservative".

Company
Lytham-based Guardian Financial Services is a life & pensions provider that has been closed to new business for the past 10 years. It has around £7.4bn in assets under management and approximately 300,000 policyholders. Guardian was founded in 1821, employs 170 staff and had underlying earnings before tax of £23m in 2010.

People
Partners Caspar Berendsen, Peter Catterall and Matthew Sabben-Clare, principals Maxim Crewe and Ben Osnabrug, and associate Andrea Bertolini worked on the deal for Cinven.

Advisers
Equity – Freshfields Bruckhaus Deringer (Legal); Deloitte (Financial due diligence and tax); Marsh (Insurance due diligence and risk); Merrill Datasite (IT due diligence).
Management – Freshfields Bruckhaus Deringer(Legal); Travers Smith (Legal).
Debt – Hogan Lovells (Legal).
Vendor – Slaughter & May (Legal); Goldman Sachs (Corporate finance).