Life and pensions consolidator Chesnara is acquiring HSBC Life (UK) for £260 million in a move that significantly expands its UK presence.
HSBC Life (UK) is a specialist life protection and investment bond provider, and is the second largest operator in the UK onshore investment bond market.
The acquisition will add about £4 billion in assets under administration and around 454,000 policies to Chesnara’s portfolio, creating a combined group with approximately £18 billion in total assets and 1.4 million policies.
Chesnara will fund the deal with a fully underwritten rights issue to raise approximately £140m, with the remainder covered by £55m from existing cash resources and £65m from an increased £150m revolving credit facility. It is offering 10 new ordinary shares for every 19 sxisting ordinary shares.
“The proposed acquisition of HSBC Life (UK) represents a material step up in scale for Chesnara Group,” said Steve Murray, chief executive of Chesnara. “HSBC Life (UK) is a high-quality business operating in products that we know well and is capable, under our ownership, of generating substantial cash flows for many years.”
The offer is to be made at 176p per new ordinary share and the price represents a discount of 40% to the closing price of 293.5p on 2 July, the last Business Day before the publication of this announcement), and a discount of 30.4% to the theoretical ex-rights price of 252.98p per ordinary share by reference to the closing price on the same basis.
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