Blackstone Divests 36% Stake In UK Insurer Rothesay Valued At $7.4B

Blackstone has entered into an agreement to sell its 36% shareholding in UK insurer Rothesay Life to Singapore sovereign-wealth fund GIC and Massachusetts Mutual Life Insurance Co.

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The transaction values the UK insurer at £5.75 billion ($7.39 billion). Blackstone (BX) did not disclose any additional financial information. Under the terms of the transaction, GIC and MassMutual will each become equal 49% shareholders. The deal is still subject to regulatory approvals.

The sale comes after a Rothesay Life booked a record £16.3 billion of new business underwritten in 2019 and said it continued strong momentum in the first half of 2020. Blackstone, GIC and MassMutual have been shareholders in Rothesay Life since 2013. Since their initial investment, Rothesay Life has grown its assets under management (AUM) from £7.5 billion to £56 billon. Today, the UK insurer secures the pensions of over 800,000 people and provides pension solutions to large UK companies including British Airways and Cadbury’s.

“The transformational growth of the business since our initial investment [in 2013] has been outstanding,” said Blackstone’s Qasim Abbas. “Rothesay is now recognised as a market leader in de-risking solutions having executed over £16 billion of new business in 2019, the largest ever total for a UK bulk annuity insurer, as well as the successful expansion into attractive new asset classes.”

BX shares have recouped a large chunk of their losses but are still down 5.8% since the beginning of the year. Looking ahead, the average analyst price target of $61.89 indicates 17% upside potential is lying ahead over the coming year.

Meanwhile, Oppenheimer analyst Chris Kotowski recently maintained a Hold rating on the stock, saying that his current valuation framework suggests that the stock is fairly valued.

“We view the stock as an attractive core growth holding, but near-term it is trading at a premium to the S&P, roughly in line with its average last year,” Kotowski wrote in a note to investors.

Overall BX scores a cautiously optimistic Moderate Buy analyst consensus which breaks down into 6 Buys versus 4 Holds. (See Blackstone stock analysis on TipRanks).