The Chinese backer of PizzaExpress is to take a £110 million slice of a firm buying traditional British pension schemes from employers that no longer want the uncertainty and hassle.
Legend Holdings, a conglomerate and investment vehicle also known for owning the personal computer maker Lenovo, is one of two backers of a £250 million capital-raising by Pension Insurance Corporation.
The proposed investment will give a stake in PIC of about 5 per cent to Hong Kong-listed Legend, whose businesses range from prawns and restaurants to phone handsets and car rental.
The move is one of the first significant UK financial services investments by a Chinese firm.
PIC said that Legend has also “indicated an intention to make additional new capital available”, either to fund the growth of PIC or to provide an exit to other investors.
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Reinet Fund, a Luxembourg-based fund, is also planning to inject an additional £140 million into PIC, boosting its holding beyond the current 43 per cent.
Both investments depend on the other existing PIC shareholders not exercising their right of first option on the £250 million worth of new shares. They include the private equity group JC Flowers, the insurer Swiss Re and the US bank J P Morgan.
PIC has taken over all or part of more than 120 traditional UK pension schemes, which employers increasingly regard as costly and uncertain. “People are fed up to the back teeth with having them,” said Tracy Blackwell, chief executive of PIC. A dwindling number of existing staff — if any — are still clocking up benefits in these defined benefit schemes.
After a record year last year, PIC now looks after the pensions of 135,000 individuals, including current and former staff at Cadbury, EMI, Philips UK and Alliance Boots. Legend owns PizzaExpress indirectly through its private equity arm Hony Capital.
Chinese investors have been comfortable buying UK commercial property and retail businesses such as House of Fraser, Hamleys and most recently Mayborn, which makes Tommee Tippee baby beakers, but they have been more cautious about financial services businesses.
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“This is one of the first UK investments in financial services by a Chinese firm,” Ms Blackwell said.