IL&P offloads British subsidiary

David Clerkin

City of Westminster Assurance, which had been closed to new business since 1995 and was considered a distraction by the company, will be taken over by niche player Chesnara, a London-quoted company that is valued at about E150 million. The deal gets rid of a non-core business and is in line with IL&P’s strategy of focusing on its operations in Ireland.

IL&P finance director Peter Fitzpatrick said the company had been looking at its options for some time. “While we’ve been happy with the financial performance of the business, it had no long-term strategic significance for us and therefore it was incumbent on us to explore other options,” he said.

City of Westminster contributed about E10 million towards the company’s pre-tax profits last year but will retain a relationship with IL&P, thanks to a separate deal that will see Irish Life Investment Managers handle the company’s E1.1 billion in funds under management. This will provide the IL&P group with additional revenue in the future.

The sale price was about E15m lower than its embedded value, but analysts said the deal would have minimal effect on the IL&P share price. Goodbody Stockbrokers analyst Eamonn Hughes said the sale came as no surprise and that the business was being run down since the decision to close to new business was taken. Chesnara needs the approval of shareholders at an extraordinary general meeting before the deal can be concluded, but the handover is expected in June. Chesnara will also go to the market to part-fund the deal by raising about E30m through the issue of new shares.

In a separate development yesterday, Irish Life also said it had signed a deal with Australian fund manager Perpetual Trustees to become the first global equities client of the company’s new Dublin office. Perpetual surprised the Irish market last year when it poached four top-ranking fund management executives from Bank of Ireland’s asset management arm (BIAM) to set up shop in Dublin.

BIAM has since gone into freefall and lost several high-profile clients who reviewed their relationships with the firm in the wake of Perpetual’s move.

The Perpetual deal will see it manage some of Irish Life’s investment funds. It is only the third external firm to be appointed by Irish Life.