Alexander Forbes and Lane Clark & Peacock acquire Schroder Pensions Group

Alexander Forbes, one of SA`s largest financial services groups, in conjunction with Lane Clark & Peacock LLP (LCP), today announced further expansion in the UK, significantly strengthening the group`s services to defined contribution pension (DC) plans and creating the opportunity to provide specialist investment products to both DC and defined benefit (DB) pension plans.

Alexander Forbes and its associate LCP have agreed to acquire the Schroder Pensions Group (SPG) from Schroder Financial Services for a consideration of up to lb22.5 million, a figure that represents the net asset value of the business at 31 August 2002. On completion of the transaction Alexander Forbes will own 75% of the business, with LCP taking 25%.

Alexander Forbes and LCP will acquire SPG by purchasing from Schroder Financial Services the entire share capital of Schroder Pensions Ltd (SPL) and its wholly owned subsidiary Schroder Pensions Services Ltd (SPSL).

Investment Solutions, a subsidiary of Alexander Forbes, is the leading South African based multi-manager and will provide specialist support in the areas of investment product design and administration, utilising their in depth experience in these areas.

The deal is expected to bring the following benefits to Alexander Forbes:

• SPG is a perfect fit with LCP, providing an additional range of services that will meet the immediate and growing needs of LCP`s existing clients.
• The DC market in the UK is, in financial terms, still in its development stage and SPG combined with LCP provides a first class base from which to develop further services for this fast growing and changing market.
• AF and LCP recognise the increasing demand for the provision of quality support services to DC pension plans enabling their clients to offer premier league schemes in the corporate pensions market.
• LCP and Investment Solutions have identified the growing need for specialist investment products to support both DC and DB pension schemes. SPL`s life licence provides an ideal vehicle in which to develop these products for the UK market.

This exciting and strategic development follows Alexander Forbes`s recent investment in LCP (one of the UK`s leading actuarial and employee benefit consulting firms). It enables the group to bring their combined strengths to the UK market place in these specialist areas using the world class Schroder Pensions Group systems and staff.

This development will also complement Alexander Forbes`s existing pensions IFA business, Alexander Forbes Financial Services, who provide insured products and services to the SME market.

Rael Gordon, Deputy CEO of Alexander Forbes, said: "I am delighted that we have made another important strategic acquisition, enabling the group further to build on LCP`s and Alexander Forbes`s strategy in the UK and on Investment Solutions`s specialist investment expertise. We are confident that, like our acquisition of LCP earlier this year, in SPG we have bought another first class business that dovetails perfectly with our existing business.

"It also gives us a platform to enter the specialist investment product market in the UK by combining Investment Solutions` experience gained in the South African market with LCP`s actuarial skills and research to develop fresh, innovative, liability focused investment solutions."

"In conjunction with LCP`s existing pensions administration business, the group can now provide pensions administration services across the full range of pension scheme arrangements."

Tony Cunningham, LCP Strategy Partner, commented: "With this acquisition, LCP can now offer an enhanced range of pensions services to our existing and prospective clients. We believe that it offers LCP exciting opportunities, particularly to develop innovative solutions for companies with DC Schemes and closed DB schemes.

"We are combining Alexander Forbes`s experience, as South Africa`s leading adviser in providing support to DC plans, with Investment Solutions`s expertise in the area of investment product development. This leaves the group uniquely positioned to take advantage of the new opportunities emerging in the UK for the quality products and services that SPG is perfectly placed to deliver.

"It`s an exciting, strategic development and is a practical demonstration of why LCP felt so positive about the deal done with Alexander Forbes earlier this year."

Following completion, SPL will be renamed Investment Solutions Ltd (Investment Solutions), while SPSL will be renamed LCP Defined Contribution Solutions Ltd. Alexander Forbes has granted an option to its subsidiary, Investment Solutions for Investment Solutions to acquire 50.1% of the company acquiring SPG, prior to the actual completion date.

The consideration will be payable to Schroder Financial Services Ltd on completion of the transaction. The consideration payable will be settled in cash and will be funded from existing cash resources and facilities.

The transaction is not expected to have a material impact on Alexander Forbes`s earnings in the short term but is a critical part of the future growth strategy for Alexander Forbes. As part of the acquisition Alexander Forbes has negotiated long-term contracts for SPG to provide services to both Schroder Investment Management (UK) Ltd and Hermes Pensions Management Ltd.

The final completion of the transaction is subject to the approval of the Financial Services Authority (FSA), which regulates life insurance companies, as well as authorising any change of control.