LONDON, May 14 (Reuters) – London-listed insurer Chaucer Holdings (CHU.L) confirmed on Thursday it is in talks with private equity firm Pamplona Capital Management about a possible stake sale, as well as ongoing takeover discussions.
Pamplona Capital Management, which also invests in hedge funds, said it is looking at acquiring a possible 29.9 percent stake in Chaucer with the partial cash offer subject to investor approval. And the company said: “Discussions will continue with each of the parties involved in the process, including now engaging with Pamplona and its advisers.”
The former chief executive of the closed life fund consolidator Resolution, Paul Thompson, now at Pamplona, told Reuters the company has completed due diligence on Chaucer and is happy with the results.
The insurance veteran noted Chaucer’s hedge fund exposure which “hasn’t put us off obviously, but it is an issue”.
Pamplona’s Thompson confirmed it has been in talks with Chaucer since January but declined to talk about a possible offer price.
“We like the management here and the business mix…and we quite like the insurance space at the moment,” he said.
Thompson, who ran Resolution from 2005 until 2007, also spearheaded the turnaround of Britannic as its chief executive.
Lloyds-listed peer, Novae Group (NVA.L), pulled out of merger talks with Chaucer in March, citing the deal as not being in the interests of its shareholders. [ID:nBNG381749]
Novae was considered one of the best fits for Chaucer, as two of the smaller London-listed Lloyds companies, competing against the larger players in the space including Amlin (AML.L), Catlin (CGL.L) and Hiscox (HSX.L).
“Novae would have a been an obvious fit, there are no obvious partners,” said an equities analyst.
“[But] it can trade out of this. Even if it has a 50 percent writeoff of the hedge fund investment, it won’t kill them,” he said.
Chaucer, which launched a 75 million pound capital-raising in January, posted a 42 percent jump in first-quarter premiums to the end of March, rising to 258 million pounds.
The company forecasts premium rates to increase by 5.9 percent in 2009 for its underwriting portfolio.
Shares in Chaucer, which have halved in value in the past year, rose 6.06 percent at 1235 GMT.
(Reporting by Lorraine Turner; Editing by Sharon Lindores)