Buyout vehicle Resolution is to buyout the UK life assurance business for £2.75 billion. The deal, which includes the life insurance business, pensions business, corporate and annuities business is underwritten by Barclays Capital and RBC Capital Markets - and other shareholders of the buyout group.
In order to fund the deal, investors who bought into Resolution will be offered 17 new shares for every share they hold at 150 pence each in a rights issue worth up to £2.25 billion in cash, with the rest of the payment for the £2.75 bn deal - around £500m - coming in shares.
In a note on 4th June, Nomura urged UK Insurance companies to underestimate the UK's medium-term prospects.
"Conventional wisdom sees Asia as offering more growth than the UK, although we agree with this in the longer term, we think the market underestimates the UK's medium-term prospects." said Nick Holmes.