Abu Dhabi Investment Authority, the world’s third biggest sovereign wealth fund, has agreed to buy a stake of up to 21.4% in UK’s Pension Insurance Corporation Group from funds advised by private equity firm JC Flowers.
PIC specialises in taking on pension liabilities from UK companies via deals usually refered as buy-ins and buyouts. It has about £25 billion of assets, and looks after the pensions of 150,000 people.
The acquisition by ADIA’s private equity department is subject to regulatory approvals, the wealth fund said, without providing a value for the deal. At the end of 2017, PIC had a net asset value of £2.9 billion, which would put ADIA’s stake around £600 million. However, this figure does not take into account if the deal was made at premium or discount rate.
In a statement, Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA, said the investment further demonstrates the department’s ongoing strategy to seek out principal investments in market-leading businesses with strong management teams.
“PIC has proven its ability to respond to the growing trend for UK companies to de-risk their defined benefit pension obligations and, as such, has strengthened its position as one of the industry’s leading pension insurance providers.”
The acquisition is the latest principal investment by ADIA across its target sectors of financial services, healthcare, industrials, technology, and consumer products.
Tracy Blackwell, chief executive at PIC, said: “We are delighted to welcome ADIA to our small group of committed shareholders with financial services expertise and long-term investment horizons. We are confident that, together, they will continue to build on the valuable support provided by J.C. Flowers over the past 12 years, and ensure that PIC is ideally placed to meet the increased demand from pension fund trustees.”
ADIA’s UK investments include a 15% stake in London’s Gatwick Airport and a 9.9% stake in Britain’s biggest water utility company Kemble Water Holdings, the parent of Thames Water.