Rothesay Life, Goldman Sachs London-based insurance subsidiary, acquired the £700 million ($1.4 billion) pension fund of Rank Group PLC, Maidenhead, England, in the U.K.s largest defined benefit pension fund buyout. Terms of the deal were not disclosed.
The deal, announced today, marks Goldman Sachs first move into purchasing corporate pension assets and liabilities. Assets of the frozen Rank Group fund will be managed by Goldman Sachs Asset Management using a conservative approach to take into account the long-term pension liability, Tom Pearce, executive director of Rothesay Life, said in a telephone interview. He declined to specify possible asset mixes that might be considered.
Samantha Wren, Rank Groups director of tax, treasury and pensions, said the fund had implemented an overlay to hedge its entire holding in fall 2007 and, earlier this year, liquidated all of its assets prior to the pension transfer to Rothesay Life. Western Asset Management, AllianceBernstein, AXA Rosenberg, BNY Mellon Asset Management and Lazard Asset Management had managed Ranks pension fund assets.
A key difference between Rothesay Lifes takeover of Rank Groups pension fund is that it is structured so the entire fund is legally transferred to a new pension platform under Rothesay Life, said Addy Loudiadis, CEO of Rothesay. In previous pension buyouts, sponsors essentially buy an insurance policy which is attached to the pension fund as an investment, but the funds pension liability is not completely removed from the company balance sheet, as would occur in the Rank Group deal.
We believe this is a complete solution to the corporate defined benefit (pension buyout) issue, Ms. Loudiadis said. We do have a pipeline (of business). We are targeting larger schemes in the FTSE 200 or 300. This is probably our niche as opposed to the smaller schemes.