Goldman plots deal to buy Paternoster

GOLDMAN Sachs is planning a £300m takeover deal of troubled pensions insurer Paternoster, according to reports.

The investment bank is said to be putting together a bid that could see Paternoster merged with Goldman’s existing pensions buyout business, Rothesday Life.

Paternoster has appointed Willis Group, the insurance broker, to advise on a deal.

Other possible buyers include rival firm Pension Corporation under boss Eddie Truell, whose previous £400m bid to buy Paternoster collapsed at the last minute in May.

Paternoster has been up for sale since August when investors started looking for an exit. The firm manages pensions for 44,000 pensioners in the UK, totalling £3.3bn in assets under management, but it has been closed to new business since running into trouble during the financial crisis.

Its original backers, which include private equity fund Eton Park, are thought to be facing losses of over half their original £500m investment.

It is not known whether Deutsche Bank, which owns 40 per cent of the business, is interested in buying up the rest.

However, Deutsche’s insurance wing, Abbey Life, worked with Paternoster on a £3bn deal to hedge the life expectancy risks of BMW’s pension scheme in February. The deal was the biggest ever of its kind, involving the funds of 60,000 pensioners.

Paternoster was set up in 2006 by ex-Prudential chief executive Mark Wood to buy up defined benefit pension schemes from companies anxious to offload their risk.

Despite its better-than-expected results for 2009, a takeover deal is expected within the next couple of months.