Phoenix Group Holdings Chief Executive Officer Clive Bannister said he’s ready to make acquisitions after the U.K.’s biggest manager of closed life-insurance funds refinanced its bank debt.
The acquirer of life insurance businesses closed to new customers obtained a 900 million-pound ($1.5 billion) five-year bank facility to consolidate its debt structure and further reduce leverage, London-based Phoenix said in a statement today. The transaction also enables a potential merger of its two largest life companies.
“We have got to a point of lift-off in terms of our preparedness in being able to do deals,” Bannister said in a telephone interview from London. “Our simplified debt structure makes us a better counterparty. We’ve reduced the quantum of our debt and gone back into the capital markets.”
Bannister was hired in 2011 to help reduce 2.7 billion pounds of debt accrued following Phoenix’s purchase of Resolution Plc for 5 billion pounds in 2007. Almost half of that debt was due this year. The CEO has also sold Ignis Asset Management to Standard Life Plc’s investment unit and a 300 million-pound corporate bond this year.
Phoenix’s next step is to obtain an investment-grade rating to further access capital markets and accelerate deals. The company plans to engage with the credit rating agencies in 2015, Financial Director James McConville said by telephone.
“Over the next 18 months, I am certain there will be more consolidation,” Bannister said. “There is about 200 billion pounds worth of closed-life business assets in the U.K.” ready to be acquired from insurers and banks.
Today’s transaction, which will include a 206 million-pound debt repayment, reduces Phoenix’s debt gearing ratio to about 37 percent, 18 months ahead of a 2016 target and down from a high of 58 percent, Bannister said.
Phoenix’s shares have lost 11 percent this year after the Financial Conduct Authority said it planned to review life policies stretching back to the 1970s. The regulator’s handling of a press leak relating to the review drew criticism from Chancellor of the Exchequer George Osborne and resulted in an independent inquiry.