New Issues & IPOs

LONDON (ShareCast) - Pearl Group, the zombie fund manager run by Hugh Osmond, has been bought by Dutch investment firm Liberty International and is expected to list on the London Stock Exchange (LSE: LSE.L - news) before the end of the year.

The reverse takeover will see Liberty (LSE: LBE.L - news) change its name to Pearl Group. Its listing on Euronext (Paris: NL0000290641 - news) will be maintained and the company will seek a primary listing in London "as soon as practicable."

Liberty will acquire 100% of Pearl by the issue of 52.8m new shares to Pearl's current shareholders and other stakeholders. Liberty may also issue up to a further 35m new shares by way of earn-out consideration.

At completion, Pearl will be owned approximately 60% by Liberty shareholders, 29.5% by Pearl's existing shareholders and 10.5% by other stakeholders.

Liberty will inject up to €600m into Pearl on completion and cut its debt by around £560m. The combined effect of the cash injection and restructuring will be to strengthen Pearl's balance sheet by over £1bn.

The combined group expects to pay a dividend after completion at an initial rate of €0.50 per share per year. Pearl's management will continue to be led by its existing chief executive and chief financial officer, Jonathan Moss and Simon Smith. After the completion of the transaction, a new board will be formed with a new chairman and a majority of independent directors.

"The capital structure being put in place will more than meet all regulatory capital requirements, accelerate the deployment of our surplus cashflows, lead to our London listing and cement Pearl's position as the pre-eminent closed fund consolidator in the UK," Pearl said.

Pearl announced in April that it plans to raise £500m, restructure its capital structure and seek a London listing.

It faces stiff competition for assets in the life sector run-off market from recently floated Resolution, run by Osmond's arch-rival Clive Cowdery.

Osmond took over the first Resolution vehicle for £5bn two years ago, though Cowdery beat Osmond with his return to the stock market at the end of last year.