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Blackstone, GIC Buy Stake in Goldman's European Insurer

Blackstone Group LP and GIC Pte, Singapore’s sovereign wealth fund, agreed to buy a majority stake in Goldman Sachs Group Inc. (GS)’s European insurance business.

Blackstone, the world’s biggest private-equity firm, and GIC will each buy 28.5 percent of the shares in Rothesay Life Ltd., a London-based insurer run by Goldman Sachs partner Addy Loudiadis, Goldman Sachs said in a statement today. Massachusetts Mutual Life Insurance Co. will also buy 7 percent, and Goldman will retain 36 percent. The price wasn’t disclosed.

“It is more capital efficient for Goldman Sachs to share its ownership with other investors,” said Michael Sherwood, vice chairman of New York-based Goldman Sachs, said in the statement. “Rothesay Life can continue its growth as a standalone business with the benefit of diversified ownership.”

Rothesay insures about 12 billion pounds ($19.4 billion) of insurance contracts for companies including IAG SA’s British Airways and General Motors Co. (GM)’s U.K. division. Firms such as Rothesay promise to pay pensions if retirees live beyond a certain age and use derivatives to hedge the risk. The insurer typically receives a portion of the pension plan’s assets.

Goldman Sachs said in August that it planned to sell a majority stake in Rothesay, which has about $9.66 billion in assets, in the next 12 months as banks face more stringent capital rules. The bank has already sold about 80 percent of Global Atlantic Financial Group, a reinsurance business in Bermuda, to institutions and high-net-worth clients this year.

‘Strong Pipeline’

Loudiadis said in the statement that diversifying Rothesay’s shareholder base was the next stage in the company’s strategy, adding that the insurer will continue to work on a “strong pipeline” of opportunities.

Chad Pike, Blackstone (BX)’s head of tactical opportunities in Europe, said in the statement that Rothesay was “well placed” to benefit from the growth potential in the U.K. pension insurance market as interest rates climb.

Tay Lim Hock, president of GIC’s Special Investment. said the fund sees “long-term potential” of the expanding market for Rothesay’s pension-insurance business. GIC is the world’s eighth-biggest state fund with an estimated $248 billion of assets under management, according to the Sovereign Wealth Fund Institute’s website.

Mass. Mutual, which invested 100 million pounds in subordinated debt in Rothesay earlier this year, said demand for risk management from U.K. defined-benefit pension plans offered significant growth opportunities.

Completion of the deal is subject to regulatory and antitrust approvals, which includes the U.K.’s Prudential Regulation Authority, according to the statement.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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