LONDON, May 1 (Reuters) – Clive Cowdery, the entrepreneur who sold insurer Resolution last year, is back in business with a restructuring venture that will target troubled banks, asset managers and insurers as the credit crunch batters the sector.
Speaking just hours after Resolution's takeover by rival Pearl completed, Cowdery said on Thursday he was shifting from UK life insurance, where he focused on funds no longer writing new business, to a broader turnaround role, as the financial sector consolidates and European regulation harmonises.
The market turmoil of recent months offers the “icing on the cake” in terms of potential returns, he told Reuters.
“The reality is the environment is much better today,” said Cowdery, one of the most colourful characters in UK insurance.
“Firstly, you have thinly spread financial groups in the UK and Europe which require restructuring and secondly, you have a standardised set of rules,” he told Reuters in an interview.
Cowdery said his new venture — also named Resolution after he bought the rights to continue to use the name — would consider a range of investments, from stakes in listed companies to drive a turnaround, to joint ventures for specific deals or even full ownership and restructuring.
Original investors in the target firms will not be bought out necessarily, as in the private equity model, but will be offered the chance to remain alongside Resolution.
Cowdery, who headed up GE's (GE.N: Quote, Profile, Research) insurance operations in Europe until he founded Resolution, said he was looking at seven economies in Europe, including Scandinavia, Ireland, the Netherlands and Germany, with opportunities in Italy and Spain.
He declined to comment on specific targets, but said Resolution would look across the sector, from insurance to savings, banking, credit, asset management and reinsurance.
Cowdery said the group continued to target an internal rate of return (IRR) in the “mid-teens”, he said, but could beat that, as happened for insurer Resolution.
“The tide has turned temporarily and there might be the opportunity for excess returns over that,” Cowdery said.
“But the current market sell-off is not the base case — it offers an enhancement to base case returns.”
Resolution has not raised a specific amount in advance of deals via a blind fund, but expects to tap “very substantial” appetite in capital market as the venture progresses. “The issue with investors is not should they put money into financial serves restructuring, that's obviously a good thing to do and obviously good timing, but can they find the right team to partner with?” he said.
Cowdery expects to eventually relist Resolution on the stock market, but said the timing would depend on the type and structure of transactions.
It last reached the stock market by backing into listed rival Britannic after a merger.
Cowdery's life insurer Resolution was bought by rival Pearl last November for 4.9 billion pounds ($9.7 billion), in a tightly fought takeover that pitted the larger-than-life Cowdery against arch-rival Hugh Osmond, the pizza-to-pubs entrepreneur.
(Reporting by Clara Ferreira-Marques; Editing by David Cowell)