CVC Capital Partners is targeting the UK’s £1.1tn defined benefit pension market through a new pension risk transfer partnership with Standard Life, backed by up to £2bn in initial capital.
The partnership, which includes Prudential Financial, Goldman Sachs and MS&AD Insurance Group, will target complex UK defined benefit schemes through pension risk transfer (PRT) transactions. CVC is leading the consortium alongside Prudential Financial, while Standard Life will contribute £500m and retain full operational control of the venture, which will be known as Standard Life PRT Solutions.
The partnership will combine Standard Life’s pension risk transfer capabilities with the consortium’s private markets asset origination and investment expertise. The capital commitment is expected to be drawn over five years.
The move gives CVC and its partners access to assets generated through the pension risk transfer market, while Standard Life will gain additional private markets origination capabilities across areas including asset-backed lending, structured credit, real estate credit, infrastructure credit and direct lending.
Standard Life, which estimates that £350bn–£550bn of UK pension scheme assets could be de-risked over the next decade, said the partnership will allow it to compete more effectively for the largest transactions, while creating a new source of fee-based revenue and supporting growth in its PRT business.
The deal also places CVC among a growing group of private capital firms seeking opportunities in the UK pensions market, where insurers and asset managers can invest in the long-dated assets backing pension liabilities.
Peter Rutland, president of CVC, said: "This partnership builds on CVC’s experience in the attractive UK PRT market through a new, long-term capital commitment, while leveraging Standard Life’s track record and established proposition with trustees. The partnership is ideally suited to CVC’s insurance asset management franchise and credit origination capabilities. We look forward to working in close collaboration with Standard Life and our consortium partners in the years ahead."
Andy Briggs, group chief executive officer of Standard Life, added: "We are delighted to announce the expansion of our PRT business in partnership with a group of internationally recognised financial institutions, who are committing global capital into the UK PRT market. For over 200 years, Standard Life has supported people across the UK to plan for and secure their retirements and this focus and commitment remains central to our strategy today.
"By bringing together our comprehensive PRT capabilities with our partners’ specialist private markets capabilities and significant capital resources, coupled with a trusted and well-known brand in Standard Life, we will be able to offer trustees and sponsors for the largest pension schemes an alternative to secure the pensions of their members across the UK. This partnership further accelerates Standard Life’s vision to become the UK’s leading retirement savings and income business."
