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Partnership and Just Retirement to raise £150m to fund merger

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Partnership and Just Retirement are to issue shares in a bid to raise £150m to fund the merger of the two companies.

In August the enhanced annuity specialists announced they would be combining to form JRP Group and targeting £40m of annual savings.

Partnership is to offer new shares in its business equivalent to 10 per cent of its current share capital. Just Retirement is expected to announce the size of its placing imminently.

JP Morgan Cazenove and Morgan Stanley are handling the issue on behalf of Partnership, while Barclays, Deutsche Bank and Nomura are joint bookrunners for Just Retirement.

The firms say the issue will raise £150m in total, of which £60m will cover “non-recurring integration costs”, £20m of transaction costs as well as boost solvency levels and fund product development.

Majority shareholders in the businesses, Cinven in Partnership and Avallux in Just Retirement, say they intend to participate in the placing.

The providers adds the placing is not conditional on the merger completing.

Under the terms of the deal, Just Retirement shareholders will own 60 per cent of the new JRP Group and Partnership shareholders will hold 40 per cent.

Partnership chief executive Steve Groves will leave the group once the merger is complete.

Both providers have seen profits decimated since the 2014 Budget where Chancellor George Osborne announced the pension freedoms. Annuity sales have been falling ever since.

This week Partnership revealed more details of a new guaranteed drawdown product.

Likewise, in February Just Retirement announced its simplified platform for the mass market blending annuities and drawdown.

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