Resolution Life is planning the biggest rights issue in the City for four years to finance the £3.5bn (€5.1bn) purchase of Abbey National’s life insurance business, it was reported today.
The company, which specialises in buying up closed with-profits funds, is understood to want to raise £1.5bn (€2.2bn) from the rights issue, with the rest of cash needed for the deal coming from borrowing, according to The Mail On Sunday.
If the move goes ahead it would be the biggest fundraising issue since Kingfisher raised £2bn (€2.9bn) through the market in 2002 to buy French DIY chain Castorama.
It is understood that details of the deal, which would more than double Resolution’s market capitalisation and push it into the FTSE 100 Index, are being finalised with Abbey’s owner, Spanish bank Santander, this weekend and could be announced as early as this week.
The UK company, which was founded by Clive Cowdery last year, had been bidding for the life-insurance business against reinsurance giant Swiss Re but is now in exclusive talks with Santander.
Resolution today declined to comment on the speculation, but in a statement issued last month it confirmed that it was in talks about the Abbey business, and would finance any deal through a mixture of equity and debt.
The group is the largest specialist manager of UK closed life funds and has around six million policies and combined life company assets of £35bn (€51bn). It has made no secret of its plans to expand further.
The firm employs around 1,700 staff in London, Worcestershire, Liverpool and Glasgow.