Report says that a consortium of PE houses including KKR has been formed to buy insurance division
See also: The end of the line?
A consortium of private equity houses has been formed to look at RBS' £5bn GWP insurance division, according to reports.
RBSI, put up for sale this week by its parent company after it was forced to tap its shareholders for £12bn, has attracted considerable interest from potential buyers within and outside the sector.
The Financial Times reported that Kohlberg Kravis Roberts (KKR), the prinicipal backers of Willis, and Apax Partners were expected to drive any potential bid. Lehman Brothers are also thought to be considering their options. On Tuesday RBS chief executive Fred Goodwin said that he would consider selling a stake in RBSI as one of a number of options as the bank attempts to raise £4bn in tier 1 capital to bolster its financial rating.
Despite ongoing instability in the global financial markets, private equity has shown heightened interest in the UK general insurance sector of late. This trend is expected to continue this year.
3i and Charterhouse have already invested significant stakes in Jelf, Hyperion and Giles, while Candover held unsuccessful talks to buy a £800m stake in Towergate.
An investment in RBSI, however, would require unprecedented levels of debt to be raised.
Sources said that it more likely that RBSI is more likely to be sold to a trade buyer, with AIG, Allianz and Zurich touted as the most interested parties.