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Potential pensions tie-up

Royal London in £500m pursuit of LV=

Barry O'Dwyer

Barry O’Dwyer: keen on buying smaller firms

Royal London, one of Scotland’s big pensions industry employers, is believed to be pursuing a takeover of LV=.

The two groups are said to be considering a £500m tie-up that would create a “mutual champion” with nearly 10m customers across the UK.

[Update 28 Sept: LV= confirmed it is in talks with “a number of parties” for a potential transaction].

City sources have told Sky News that a transaction would bring together the pensions, life insurance and asset management businesses of Royal London and LV=, ending the latter’s 177-year status as an independent business.

Between them, the two groups employ close to 6,000 people, more than two-thirds of whom work for Royal London which has a Scottish base in St Andrew Square and owns a number of old Scottish brands including Scottish Life and Scottish Provident.

Should the tie-up be completed it would strengthen Royal London’s status as the UK’s biggest mutual life, pensions and investment company, with £139bn of assets under management.

LV= manages assets worth £14bn since selling its general insurance operations to Germany’s Allianz last year.

It is thought Royal London would finance an acquisition through the proceeds of a £600m debt-raising it undertook late last year.

Industry analysts believe it could see the LV= brand disappearing from the life and pensions market.

Royal London’s new management pairing of chairman Kevin Parry and chief executive Barry O’Dwyer, who joined from Standard Life Aberdeen, have been looking to acquire smaller firms with strained balance sheets.

However, private company Bain Capital, which has backed esure, is also keen to acquire LV=, previously known as Liverpool Victoria.

Other potential suitors for the business are said to include Phoenix Group Holdings, the listed insurer, and Cinven, the buyout firm.

At the beginning of this year, LV= ended its friendly society status by becoming a company limited by guarantee.

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