Paternoster Capital Raise May Lead To Sale

FRANKFURT (Reuters) – Paternoster , part-owned by Deutsche Bank (DBKGn.DE), appointed insurance brokers Willis (WSH.N) to raise more capital, a person familiar with the matter said, in a move that could lead to a sale of the specialist pension business.

Paternoster declined to comment. Deutsche Bank, which owns 40 percent of Paternoster, declined to comment on whether it would put more funds into the company.

Rival insurance business Pension Corporation, which made an unsuccessful attempt to buy Paternoster in May, is not planning to renew its bid, another source familiar with the matter said on Monday.

London-based Paternoster, which had assets of 3.3 billion euros ($4.23 billion) at the end of 2009, specialises in taking on the risks associated with companies’ pension schemes and assumes responsibility for paying their pensioners in the future.

But the business has been restructuring in the wake of the Sept. 2008 collapse of U.S. investment bank Lehman Brothers and is on the lookout for fresh capital.

The Financial Times earlier cited people close to the matter as saying Willis is advising Paternoster on its options and has sent out information to banks, insurers, reinsurers and financial investors to solicit offers for all or part of the company.

Paternoster is hoping to receive initial expressions of interest by September, the newspaper said.

The company’s other shareholders include Eton Park, which owns a 25 percent stake, Cheyne Capital, Lansdowne Partners, and Jupiter Asset Management [JPAMG.UL].

Earlier this year, Paternoster helped Deutsche Bank execute the largest ever longevity insurance transaction when it helped BMW (BMWG.DE) hedge its longevity risk for its UK operations pension scheme.

Through Deutsche Bank’s wholly-owned insurance company, Abbey Life, BMW hedged risks associated with almost 3 billion pounds ($4.68 billion) of pension scheme liabilities related to about 60,000 pensioners. ($1=.7804 Euro) ($1=.6415 Pound) (Reporting by Victoria Howley and Cecilia Valente in London and Edward Taylor in Frankfurt; Editing by Jon Loades-Carter)