The global investment bank Goldman Sachs finally sealed its first major buyout of a UK pension scheme yesterday, snapping up Rank Group's £700m plan – the biggest deal in the closed pension fund market to date.
The sale of the scheme, which has some 19,000 members, frees gambling group Rank, led by the chief executive Ian Burke, from some £30m in additional pension payments over the next two years, and will raise it an additional £20m from some of the surplus assets in the scheme. Goldman Sachs will take over the fund via its subsidiary Rothesay Life.
The transfer opens the door for a break-up of the rest of Rank, which has had a difficult few years. Last year's smoking ban in England has hit sales at the group's Mecca Bingo chain, while it was also recently forced to withdraw 1,000 lucrative, fixed-odds betting terminals from its venues. The Government has also hiked tax on casinos, and pulled back on its planned liberalisation of the gaming industry. Only this week, it scrapped plans for a UK supercasino in Manchester.
Shares in Rank leapt as much as 6 per cent on yesterday's news, only to slip back to close the day down 0.5p at 90.5p, giving the group a market value of £353m.
Commenting on the sale, Peter Gill, Rank's finance director, said: "The transfer of all the obligations and financial risk of Rank's defined benefit pension plan to an insurer is in step with the changes we have made to reposition the group in recent years ... Rank will be better placed to address its near-term challenges and to grasp its long-term opportunities. In addition, members of the pension plan will benefit from the high level of security provided by Rothesay Life."
Addy Loudiadis, the chief executive of Rothesay Life, said he hoped that the Rank deal was the first of many for Rothesay in the pension buyout arena. He said: "Companies and trustees are increasingly looking for effective solutions to transfer pension liability risk to specialist insurance providers. Rothesay Life is ideally placed to become a leading player in this market."
Members of the Rank scheme will be given a choice of transferring their predicted benefits out of the fund and into a private money purchase scheme.
The trustees of the scheme also said they welcomed the transfer. Mike Samuel, the chairman, said: "We believe that their model, backed by Goldman Sachs' strength and financial expertise, will provide a high level of security for scheme benefits and also an excellent administrative service for the 19,000 members."Reuse content