Private equity owners Hugh Osmond and Manjit Dale stand to gain more than £100m in the run-in to the summer listing of Phoenix.
The pair, through their respective vehicles Sun Capital and TDR Capital, own contingent rights to more than 20m unissued shares in Phoenix, the new name for zombie life assurance fund Pearl. These must be removed prior to the firm’s listing due to the potential dilution they present and will likely be paid out in shares in the newly listed company.
Sun and TDR were given the contingent rights after giving up 70 per cent of their investment in Pearl and injecting £75m of new cash after it ran into trouble.
Last month Phoenix ended a long-running battle with a group of renegade bond holders who were up in arms over an unpaid coupon on £500m of its bonds.
The group had threatened to block the listing but capitulated when it emerged Phoenix will not be seeking to raise any funds.
A Pearl spokesman told City A.M. that news of the pay-out is unlikely to anger the bond holders, who accepted a hit of 15p on the pound for their investment.
He said: “I don’t think this will come as a surprise to anybody. This issue has been in the public domain since September.
“It has been clear since then that the contingent rights need to cleared out for us to achieve the premium issue and we’re confident it will go ahead.”
Phoenix’s chief executive Jonathan Moss has said that negotiations over the contingent rights have been constructive and that he expects them to be concluded soon. Last Wednesday, Phoenix reported pre-tax profits of £91m for 2009, up from £31m the year before.