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Hugh Osmond is selling a controlling stake in his Pearl insurance empire to one of America's most unusual financiers.
The former Pizza Express entrepreneur is near to closing a deal that will see debt-laden Pearl get a £520 million cash injection from a fund controlled by Nicolas Berggruen, a hedge fund investor dubbed “the homeless billionaire” because he lives in hotels.
Berggruen's takeover vehicle Liberty Acquisition Holdings, based in the Cayman Islands, gets a 60% stake in Pearl in return for its cash injection.
That leaves Osmond's Sun Capital and his partners at private-equity house TDR with 30%, meaning that he has effectively relinquished control.
Berggruen is the son of famed art dealer Heinz Berggruen, once the world's greatest Picasso collector.
Worth around $2 billion, Berggruen claims to have given up most of his material goods, saying “possessing things is not that interesting. Living in a grand environment to show myself and others that I have wealth has zero appeal.”
He is said to run his various private-equity and hedge-fund interests from his Blackberry while speedwalking around Central Park in New York City.
The single 47-year-old, who claims to eat two meals a day of which one is always chocolate cake, has interests in art and real estate in countries including Israel, Turkey and India.
He bought and burnt every copy of a Dutch magazine that profiled him a few years ago.
The deal will cut Pearl's £3 billion debt pile, with banks led by the now government controlled Royal Bank of Scotland and Lloyds Group taking a £400 million writedown. The banks receive a £75 million convertible bond equivalent to a 10% equity stake.
Pearl is a so-called “zombie” insurer which manages closed books of life insurance funds.
It grew dramatically last year when it completed a £5 billion deal to acquire its fiercest rival Resolution.
Analysts say this deal looks increasingly ill-timed, as it came just before the financial crisis which left all indebted companies in difficulty. Liberty said today that it is awaiting the approval of the Financial Services Authority before it finalises the takeover.
The regulator is likely to be grateful that the insurer is on a sounder financial footing.
Pearl is still rowing with bondholders after defaulting on a £33 million interest payment. One bondholder today said that Pearl has “complete disregard” for the issue.
Reader views (1)
This is daylight robbery, Lloyds is issuing shares by the bucket load and yet taking an enormous writedown – what an absolute joke, the incompetency of Government is astonishing
- Wallytrader, London, 03/06/2009 11:25
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