Keep Small and Plentiful, if You Wanna be Loved
Last year it was predicted that 2017 would be the biggest year so far for the Pension Buyout market. So have the first few months of this year given us an indication that it will indeed surpass last year’s total?
It was announced at the end of March that there had been over £1bn of transactions, which seems underwhelming given that the volume for 2016 was £9bn. However, we are perhaps seeing more activity in this space than ever before despite transaction sizes frequently coming in at under £100m. Deals such as the PIC buyout of Alps Electric came in at £33m, and their buy-in deal with the Civil Aviation Authority saw £90m worth of pension promises passed over from the aircraft safety regulator.
That’s not to say we haven’t seen larger deals. PIC have completed the buyout of GKN in a deal worth £190m, with Mercer and Cardano advising, but we have yet to see deals as large as Legal and General’s £1.1bn buyout of the Rolls Royce Group in November. Why?
One well known Director of a buyout provider explained that the focus this year will be on mid-market pensions as many insurers will not want to risk allocating significant amounts of limited recourse to a sizeable pension deal that may not come to fruition. Notwithstanding this, as so many of the pension schemes that were being optimised in 2016 are now coming to market, 2017 is likely to be a significant year, at very least in terms of volume of deals.
Plenum is a specialist Executive Search provider within the Pension & Insurance De-risking market. To discuss how our network could help you please contact: matthew.ayub@theplenumgroup.com