Stay informed with free updates
Simply sign up to the Pensions industry myFT Digest — delivered directly to your inbox.
BlackRock and Goldman Sachs’ asset management arm have joined the race to fund the expansion of Phoenix Group’s pension-risk transfer business, as US investors pile into the market for UK retirement plans.
Private investment group Sixth Street has also sought to provide the funding to enable Phoenix to compete for more and larger buyouts of pension pots, according to multiple people familiar with the investment managers’ plans.
The potential deal is the latest demonstration of US asset managers and private capital groups’ interest in the lucrative UK pension risk transfer market. Brookfield and Apollo-backed insurer Athora are among groups that have recently struck takeover deals for PRT specialists.
The FT previously reported that Phoenix was in talks to raise more than £1bn from private capital firms for a new entity that would provide more capital for its pension risk transfer agreements — in which companies pay insurers to take on their financial obligations to retirees.
Goldman Sachs’ asset management business has emerged as an increasingly important part of the bank’s push to diversify its revenues into steadier fee-generating areas. BlackRock, the world’s biggest fund manager, has pushed into private markets including with its takeover of HPS Investment Partners.
More than one asset manager could invest in the British insurer’s plan, nicknamed Project Ocean, according to people who reviewed Phoenix’s plans.
Phoenix — which is in the midst of a rebrand and will soon be named Standard Life — aims to compete more aggressively with groups such as PIC, Rothesay and Legal & General, which insure the largest pension schemes.
Consultancy LCP forecasts that UK pension schemes will seek to transfer up to £550bn of assets to insurers over the next decade. But the risk-transfer market is expected to shrink in the long term as more businesses move from defined benefit to defined contribution pension plans.
Brookfield, Blackstone and Athora all announced deals within weeks of each other last year as competition intensified among alternative asset managers seeking exposure to UK retirement savings.
Whereas Brookfield and Athora announced direct acquisitions of UK insurers, Blackstone announced a $20bn agreement to give Legal & General greater access to US private credit investments.
Phoenix is proposing that investors enter a joint-venture agreement with a separate legal entity — Standard Life — rather than the company’s main Phoenix Life Limited entity, according to multiple people who reviewed the plans.
The process comes as regulators and senior market figures have raised concerns that some US alternative asset managers may be taking on too much risk using insurers. A person familiar with Phoenix’s plans said that this structure was structured to give investors more “skin in the game”.
“These discussions are at an early stage and there is no certainty that this will result in a transaction,” Phoenix said.
Goldman Sachs Asset Management and BlackRock declined to comment. Sixth Street also declined to comment.
