The linked deals, which Sir Mark described as the completion of a process that started with last year's separation of St James's life assurance interests from former business partner Lord Rothschild's investment activities, will also give up to 60 founder "partners" in J Rothschild shares worth about pounds 150,000 each.
For the Pru, the acquisition by tender of a 29.9 per cent stake in St James's Place for pounds 39.6m represents a move into the upper end of the personal financial services market, bringing it closer to J Rothschild's wealthy client base. It has made an assurance not to increase its stake for at least a year and has said it agrees that St James should remain independently managed and maintain a separate stock market listing.
It is the second time Sir Mark has grown and then cashed in on a life assurance business, having sold Hambro Life to BAT in the early 1980s. His personal stake in J Rothschild amounts to almost pounds 12m. His co-founders, Mike Wilson and Keith Carby, have similar holdings.
Sir Mark said yesterday the catalyst for the complex deal was the recent pounds 2.9bn takeover by the Prudential of Scottish Amicable, which joined forces with St James's Place Capital in 1991 to form J Rothschild Assurance and remained a significant shareholder. The takeover meant the Pru's stake in St James rose from around 3.5 per cent to around 22 per cent. By tendering for further shares it plans to take its holding to the maximum allowable under takeover panel rules without being forced to make a full offer.
Nine-month figures yesterday showed J Rothschild growing its life assurance business almost twice as fast as the rest of the market. New business grew by 39 per cent last year compared with just 24 per cent for a comparable spread of Association of British Insurers members.
Mike Wilson, chief executive, said that outperformance reflected the high quality of Rothschild's sales force, where employees had an average 11 years' financial services experience and were required to have worked in the industry for at least three years before joining.
After rapid growth during its short existence, Rothschild now sells more new policies than Britannic and United Assurance and two thirds as many as Abbey Life and Scottish Amicable itself.
Following the reverse takeover, about three-quarters of St James's Place's business will be represented by the J Rothschild operation, with the rest accounted for by Life Assurance Holding Corporation, a vulture fund set up to buy and close down ailing life insurers, and Global Asset Management, an institutional fund manager.
On the basis of St James's closing share price yesterday of 131p, up 5.5p, the enlarged company will be valued at pounds 562m.Reuse content