Just Eat backer closes in on Lloyds tax planning business

Lloyds Banking Group is close to a deal to sell its Isle of Man-based investment and tax planning business to an offshore specialist funded by a private equity backer of Just Eat, the takeaway company.

Insiders said the state-backed lender's insurance arm Scottish Widows was in exclusive talks to sell the zombie business Clerical Medical International (CMI) to RL360, which is also based on the island.

An announcement about the sale of CMI - which has an estimated embedded value, a way of valuing life assurers, of about £200m - could come as early as this week.

The disposal of CMI, which Lloyds inherited when it acquired HBOS during the financial crisis, is the state-backed lender's latest transaction as it scales back its global presence.

Since the crisis Lloyds has sold a series of assets, from Irish mortgages to a Swiss private bank, as it focuses on its main UK retail and commercial banking and insurance businesses.

RL360, which is controlled by Vitruvian Partners, the private equity house, fought off competition from five other parties to enter into exclusive talks to buy CMI, the insiders said.

The group's expected acquisition of CMI comes less than 18 months after its managers agreed to buy out the business from its former owner Royal London, the UK's largest mutual life and pensions group, with backing from Vitruvian.

Vitruvian - known for investing in Just Eat two years before the online food takeaway service listed in 2014 - plans to "roll up", or integrate, RL360 and CMI, people familiar with the matter said.

RL360 was itself formed through a merger of Scottish Life International and Scottish Provident International. Together, RL360 and CMI would have total assets under management of about £7.5bn.

CMI was established almost 30 years ago to allow UK savers to generate tax-free capital gains. But tax changes have made offshore products, such as those offered by CMI, less attractive to British customers.

Following a review of Scottish Widows by Toby Strauss, the insurer's chief executive, CMI stopped taking on new business in 2012.

Dealmaking in the life assurance sector is heating up. Aviva this month completed its all-share takeover of smaller FTSE 100 rival Friends Life.

Bankers are expecting more deals - particularly those involving zombie or "run off" businesses such as CMI, which no longer write new policies - as regulatory changes put business models in the sector under pressure.

The CMI transaction is the latest involving offshore bond groups. Legal & General in February sold its Dublin-based investment and tax planning arm, which targets wealthy Brits, to Canada Life for an undisclosed sum.

Lloyds declined to comment.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation