Clive Cowdery: Comeback king

Clive Cowdery is back – and so is Resolution. Less than six months after the financial services entrepreneur sold the life insurance assets of his Resolution business to Hugh Osmond's Pearl Group for £5bn – cannily keeping the rights to the name – Mr Cowdery announced his next venture yesterday.

The new business – which will trade as Resolution, naturally – has a shopping list of assets in the life assurance and savings, banking and credit, asset management and general insurance sectors. And true to form, Mr Cowdery has no qualms about making hostile approaches to financial institutions, seeking the backing of their shareholders if the directors won't play ball.

Mr Cowdery announced plans yesterday to raise an initial £1bn through an initial public offering of his Resolution business, which is seeking to buy up undervalued companies across the financial sector. The capital raising, planned for November, will give investors the right to supply further funds as opportunities arise, up to £15bn.

Mr Cowdery says it may be possible to acquire assets in an amicable way, as he did when he built up Resolution's closed fund business. But he added: "Does that rule out doing things in a more muscular manner? Our shareholders come from the very same community that own the target companies.

"On that basis, I don't think that community would want us not to put forward a proposal if the board resisted that. If there is a board that is resisting change, we will get pressure from investors to make sure we put forward a proposal.

"If you were a fund manager before today, the most you would have been able to do was vent, gripe or sell. Now there is something else."

Mr Cowdery expects the public offering to gain the backing of big institutional shareholders who will effectively buy pre-emption rights by investing in the business. He say his business will offer investors extra influence over financial companies' strategic decisions as they manage their businesses through the downturn and financial crisis.

He made an initial foray in June by proposing a £400m investment in Bradford & Bingley that was rebuffed by the beleaguered mortgage bank. That approach was backed by some of B&B's biggest shareholders, including Standard Life and Legal & General, who were irate about the bank's plan to sell a stake to the private equity group TPG.

Asked if boards would be asking themselves what their shareholders and Resolution were cooking up for them, he replied: "Yes."

John Tiner, the former chief executive of the Financial Services Authority, has joined Resolution as chief executive and will serve on the board alongside Phil Hodkinson, the former finance director of HBOS.

Analysts say Mr Tiner's appointment would provide Mr Cowdery with regulatory know-how and extra credibility at a time when regulators are scrutinising deals more closely. Mr Hodkinson ran HBOS's insurance business before becoming finance director and leaving last year, giving him hands-on experience across the sectors targeted by Mr Cowdery.

Mr Tiner says Resolution has three main options for acquiring assets. It can buy and "roll up" businesses such as asset managers or mortgage books to create scale in the same way that Mr Cowdery collected life funds; it can buy and break up a financial conglomerate whose components are worth more than its market value; or it can join companies buying rivals to take unwanted assets off their hands.

The plan is to have up to three projects at any one time, with each expected to require about £5bn of capital. A three-year buy-up of asset managers could run alongside a one-year project to dismantle a conglomerate.

Mr Cowdery will not be drawn on specific companies or sectors that Resolution might target. "It is not in the interests or our shareholders to comment on specific targets or timing," he says.

The 45-year-old ran the European insurance division of GE, the US conglomerate, before leaving to buy up unwanted life businesses from companies such as Royal & Sun and Abbey Nat-ional that were sapping the capital of their parents. His plan attracted scepticism at first but Mr Cowdery proved the doubters wrong when he sold Resolution after five years to Mr Osmond, his bitter rival, receiving about £150m for his stake in the business.

A senior fund manager at a big institutional investor says: "There are a lot of walking wounded financial businesses around that are partially broken business models with traumatised CEOs or leaderships that might need a bit of tender loving care and there may be scope for this kind of consolidation."

But the investor says Mr Cowdery's reputation for picking up bargains could make deals hard to agree because management would be wary of selling off assets, only to find Mr Cowdery making another fortune not far down the line.

If Mr Cowdery wants to "roll up" mortgage books, he could go back to B&B, buy Paragon, the buy-to-let lender that is in takeover talks, or offer a home to struggling building societies after Cheshire and Derby-shire were forced to seek the safety of mergers with Nationwide.

Leigh Goodwin, a banking analyst at Fox-Pitt Kelton, says it would be risky to buy up mortgage assets now in such an uncertain housing market and that asset managers might be a better bet. "With the life funds, they waited until the consolidators were bombed out and that is why they have got such credibility. It's still a dangerous stage in the housing market cycle and you don't want to spend all your money and have it drained off by bad debts," he said.

Mr Goodwin says asset managers might be a better sector at the moment and that HBOS's 60 per cent stake in St James's Place, valued at about £700m, would be a good place to start. HBOS has said it has no sacred cows and will consider offers for businesses at the right price after its £4bn rights issue. He could also return to Friends Provident, the life insurer he tried to merge with before Mr Osmond gatecrashed the deal.

Mr Cowdery says he is not calling the bottom of the market for prices of financial assets but that Resolution is tapping into a new willingness by investors to force an overdue restructuring of the industry. "We don't think a public listed vehicle with this sort of fin-ancial weight and these sort of very, very focused targets has been done before and we think the model is exactly right for the times we live in today," he says.

Five companies that could be on the hitlist

Clive Cowdery has left his plans broad to keep the market guessing, but these names may not be far from his mind:

Friends Provident

Resolution was going to merge with the life insurer before Pearl scuppered the deal. With Friends' own restructuring plan floundering, Mr Cowdery could step in.

Paragon

The buy-to-let mortgage lender is in talks with potential bidders that might include Resolution. Its assets could be the start of a mortgage consolidation business for Resolution.

Bradford & Bingley

Mr Cowdery won the backing of B&B's big shareholders when he made an approach in June to put £400m into the mortgage lender at 72p a share. B&B's turbulent rights issue is over and the bank has a new chief executive, but many think its future lies in being bought out.

Bristol & West

Mr Cowdery could be interested in the UK mortgage business of Bank of Ireland as a first step into the mortgage market.

HBOS

With a market value of more than £17bn HBOS would surely be too big a conglomerate for Mr Cowdery to dismantle, but investors think the bank has assets that could be sold off, including insurance and asset management operations. With the bank's formerfinance director on board, Resolution would be well placed to play a part in a restructuring.