Reinsurance company Wilton Re Overseas has provided an undisclosed amount of seed capital to defined benefit fund consolidator Clara-Pensions.
Alongside global credit investment firm TPG Sixth Street Partners, Wilton Re Overseas will provide funding to help Clara-Pensions in its plan to help consolidate £5 billion ($6.5 billion) of U.K. DB liabilities over the next five years, according to a source close to the company. The investment is expected to be completed by the end of the year. Sixth Street seeded Clara with a £225 million initial commitment in June. As Clara grows, Sixth Street's commitment will increase to £500 million, the firms said when the backing was announced in 2018.
Wilton Re Overseas' commitment is not capped by size.
Clara aims to become a bridge to buyout for small employers that can't afford to conduct risk transfer transactions on their own. It is awaiting the result of an assessment by the U.K. Pensions Regulator before it can begin such operations. Assets and liabilities outsourced to Clara are guaranteed by its capital providers, "thus securing a lower-risk journey to buyout. Only after Clara has fully secured promised benefits for its members is there any return to its capital providers," a news release said Thursday.
"With the combined support of Sixth Street and Wilton Re, now more than ever, I am confident that Clara has the resources required to support members on their journey to buyout. We look forward to completing the Pension Regulator's rigorous assessment and welcoming our first members," Adam Saron, CEO of Clara-Pensions, said in the release.
Chris Stroup, chairman of Wilton Re's board of directors, added in the release: "We have tremendous respect for the work that Adam and his team and Sixth Street have completed thus far in preparing Clara to succeed."
Houlihan Lokey advised Clara on the transaction.