Hugh Osmond, the leisure to financial services entrepreneur, was left red faced yesterday after discovering he had been shut out of talks to buy Abbey National's £29bn of closed life fund assets.
In a statement yesterday morning, Resolution, the closed life book consolidator, revealed it had entered into exclusive talks with Abbey to buy the assets - for which it is expected to pay as much as £4bn.
Mr Osmond, who bought Henderson's £26bn of closed life funds for £1.07bn last year, has been among a clutch of players hoping to get their hands on Abbey's book over the past few months. But it emerged yesterday that Abbey, which is now owned by the Spanish bank Santander Central Hispano, invited only Resolution and Swiss Re to the table, snubbing approaches from other bidders, including Mr Osmond.
A spokesman for Mr Osmond's company said yesterday: "We've not been invited to participate in a sales process. If invited, we would be very interested in participating." He is believed to be considering a move to break-up the exclusive talks, urging shareholders, many of whom are British, to force Abbey to hold a more thorough auction for the assets.
The situation appears to be a reversal of last year's auction for Henderson's closed life books. Mr Osmond secured exclusive talks with Henderson before Resolution had been given an opportunity to come to the table.
Although Resolution subsequently mounted a higher offer, Mr Osmond managed to close the deal by paying an extra £50m. If Resolution succeeds in its bid for the Abbey assets, which include the Scottish Provident and Scottish Mutual funds, it will be the biggest closed book deal so far, almost doubling Resolution's assets from £38bn to £67bn.
Resolution currently has only about £300m in cash, and would need raise more than its market value - currently £2.39bn - to pull off the transaction. In a statement yesterday, Resolution said that it would fund the deal via an "appropriate mix of equity and debt, taking account of the capital structure of the business being approved".
In spite of such a potentially large fund raising ahead, the market responded positively to yesterday's news, with Resolution's shares leaping 32.5p, or more than 5 per cent, to 662.5p.
If successful, the deal would place Resolution firmly in the FTSE 100. The group has been on the brink of entering the blue chip index since its £1.8bn merger with Britannic last year.Reuse content