Blackstone Group LP agreed to buy the European wealth-management business of Friends Life Group Ltd. for as much as 356 million pounds ($609 million), the largest investment of its type for a 2-year-old unit run by David Blitzer.
Blackstone, based in New York, will pay 254 million pounds upfront with a deferred payment in the form of a loan note for the Lombard business, according to a statement today from Friends Life. The insurer said it plans to return 261 million pounds to shareholders through a share buyback.
Blackstone is making the investment through its Tactical Opportunities Group, which invests client money in deals that don’t fit traditional private-equity mandates. Lombard provides wealth planning for high and ultra-high net worth investors, a business that benefited as the number of millionaire households in the world jumped to 16.3 million in 2013 from 13.7 million in 2012, according to Boston Consulting Group.
“Lombard’s compelling value proposition to policyholders, dedication to distribution partners and strong management and employee team have created a unique franchise,” Menes Chee, a Blackstone managing director, said in the statement.
Blackstone is buying the unit through a fund, meaning it’s a financial investment and separate from the firm’s efforts to sell its products directly to wealthy individuals. The world’s biggest manager of alternative assets oversees about $272 billion.
The firm started raising money for Tactical Opportunities in 2011 to make investments that don’t fall within the boundaries of its other businesses, such as leveraged buyouts or hedge funds. Led by Blitzer, the $5.6 billion arm has bought oil tankers and developed Brazilian shopping malls. It has also sought to take advantage of banks having to sell assets because of regulatory changes and the dismantling of proprietary trading desks.
The unit’s largest single investment prior to Lombard was a $297 million deal to buy a stake in insurer Rothesay Life Ltd. from Goldman Sachs Group Inc. Blitzer said last month that Blackstone is planning its second Tactical Opportunities fund this year.