Citigroup has sold EMI Group’s £1.5bn pension fund to the Pension Insurance Corporation. It is the largest ever pension insurance buyout in UK history.
EMI’s pension fund was retained by Citi as part of the terms of EMI’s 2011 sale - in which its recorded music division was acquired by Universal Music Group and its publishing division went to Sony/ATV.
The bank has held the pension fund since then but has now agreed to sell to PIC in a deal that covers all of the fund’s 20,000 members.
Clive Gilchrist of BESTrustees and Chairman of the trustee company said: “I have written to the Fund members telling them that their benefits have been secured in full with PIC; as a trustee, fully securing benefits is the ultimate goal.
“An enormous amount of time and effort has been put into this by all concerned. The outcome demonstrates how worthwhile it has been.” The deal is a rare example of a large pension buyout: there have been fewer than expected in recent years because of low bond yields, which has depressed prices.
Swapnil Katkar of Citi’s Pension Solutions team said: “We ran a disciplined process that allowed the trustee and sponsor to achieve their objectives of acquiring all risk cover on competitive terms from a leading provider. Working closely with the trustee board, sponsor representatives, insurers, legal counsel and actuarial advisors allowed us to conclude the policy acquisition within five months, ahead of plan, despite the low interest rate environment and volatile market conditions.”
David Collinson, co-head of Business Origination at Pension Insurance Corporation, said: “We are proud to have completed this transaction, the largest ever pension insurance buyout. We worked closely with all parties to help them move rapidly through the process and to give them price certainty through an “All Risks” structure.”