Activity in several markets was delayed or disrupted by the UK’s referendum on its European Union membership in June—not least UK real estate. But de-riskers never sleep. Clive Wellsteed has led some of the most publicized buy-in and buyout transactions in the UK in the past 12 months, including the ICI Pension Fund’s July deal with long-term partner Legal & General (L&G). The shock referendum result rocked markets and sent UK government bond prices soaring. And corporate bonds—used to value L&G’s bulk annuities—became more attractive, knocking £10 million ($13 million) off the pre-referendum price.
LCP urged ICI to act fast, using the innovative “umbrella” structure Wellsteed helped build. “The key advantage of this approach is that the trustee can move quickly to insure additional tranches of liabilities when competitive pricing becomes available,” Wellsteed said of the project last year. “The execution process is limited to documentation of the key tranche-specific parameters—for example, how the premium is paid, the timescales for any data cleansing, and the parameters for the security arrangements.”
This work paved the way for a £750 million buy-in to be completed just eight working days after the June 23 vote—a record for a British transaction. It was the eighth such deal ICI completed in less than three years, including three advised by LCP in the past 12 months. Wellsteed and LCP also have the £2.4 billion buyout of the Philips UK pension to their name—another record breaker, this time the country’s biggest full buyout. Beat that, Usain Bolt. —Nick Reeve