Phoenix coy over many approaches for assets

SHARES in life insurance specialist Phoenix Life jumped more than ten per cent in morning trading yesterday after it admitted it had broken off takeover talks with one bidder but had been approached by at least one other.

FTSE 250-listed Phoenix is considering an early stage approach from private equity group CVC Capital Partners, after talks with Resolution, a rival buyer of closed life insurance books, broke down over price.

But in a statement it also referred to “certain other approaches concerning potential offers” as well as CVC, which owns motor racing brand Formula One.

Sources close to Phoenix said it had not been put up for sale by shareholders but had received the approaches opportunistically. They said CVC’s interest was “relatively early” with no formal offer tabled.

Swiss Re, a reinsurance specialist that has been bulking up its own closed-end life business, Admin Re, by buying UK life assets from groups such as Met Life, is also said to be interested.

“The company is clearly attractive,” one source told City A.M.

Analysts expressed surprise that Phoenix had attracted not one but many suitors, given its high £2.5bn debt pile.

Investec’s Kevin Ryan argued that Phoenix’s strategy “is supposed to be that it is now in a consolidation phase which will lead to a sale or break up of the life businesses, while throwing off the maximum amount of cash for shareholders”.

But others said Phoenix’s current position in its turnaround cycle, as it pays down and refinances its debts, made it a good opportunity for private equity funds.

“It’s a difficult equity story currently but this will change in the short to medium term as it gets to grips with its debt issues. So from a private equity view it’s a classic turnaround story,” one said.