A Chinese investment giant is close to sealing an agreement to plough hundreds of millions of pounds into one of the City's biggest pension buyout vehicles.
Sky News understands that Legend Holdings, which part-owns the Chinese personal computing group Lenovo, is in advanced talks to buy a big stake in Pension Insurance Corporation (PIC), which insures the retirement schemes of EMI Music and the London Stock Exchange.
Legend has been in talks with PIC for several months, and a deal could be reached in the next fortnight, sources said on Tuesday.
The terms of its investment are expected to see it commit several hundred million pounds in return for a substantial minority stake in PIC.
Istithmar World, the Dubai-based fund which is already a PIC shareholder, is also expected to increase its investment, one of the sources said.
In addition to raising about £250m by issuing new shares, existing PIC shareholders - including Royal Bank of Scotland (RBS) - are expected to sell roughly £250m of their holdings.
If completed, Legend's investment would reflect an acceleration in the amount of Chinese capital being earmarked for western companies and infrastructure projects.
A new nuclear power station at Hinkley Point in Somerset - about which doubts have been growing because of uncertainty about its financing by the French utility EDF - is expected to see several billion pounds of Chinese money invested if it proceeds.
Anbang, a Chinese insurer, is engaged in a $14bn (£10bn) bidding war for Starwood Hotels & Resorts, owner of the Sheraton and W chains, while CDH, a Chinese private equity group, has been vying to acquire Mayborn, owner of the Tommee Tippee baby products range.
Legend owns assets in industries ranging from financial services and technology to dentistry and private equity, and is said to have seen off competition to invest in PIC from rival bidders including CVC Capital Partners, the largest shareholder in Formula One motor racing.
PIC specialises in insuring third parties' corporate pension schemes and taking on responsibility for making retirement payments to their members.
The company insures approximately 130,000 pensioners through the schemes it has struck deals with, which include blue-chip companies such as the London Stock Exchange Group, EMI, Cadbury and Honda.
Its move to raise additional capital comes as the pension buyout sector evaluates several sizeable takeover targets.
The pension buyout industry has grown rapidly during the last decade as companies have sought to find ways of managing the longevity risk embedded in their defined benefit pension schemes.
PIC's two largest shareholders are Reinet Fund, which owns 43%, and JC Flowers, the private equity group, which owns 25%.
The company's other institutional shareholders include Dubai's Istithmar, Swiss Re, Och Ziff Capital and JP Morgan, whose combined stakes total roughly 20%.
PIC declined to comment.
Sky News
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