News and Press
| Date: | 22nd June 2008 |
| Title: | Stakes are raised in RBS Insurance sale as Lehman Bros steps in |
| Author: | Simon Evans, Independent on Sunday |
| Download: | pdf version |
Stakes are raised in RBS Insurance sale as Lehman Bros steps
in
Allstate, the American financial giant, has appointed Lehman Brothers
to mastermind its purchase of the £6bn insurance arm of Royal Bank of
Scotland (RBSI).
Allstate, the largest home and car insurer in the US, is one of four bidders
left in the frame to buy RBSi, along with Allianz of Germany, the US firm
Travelers and Switzerland's Zurich, which is being advised by Citigroup.
Giles Harrison, head of Lehman's Financial Institutions Group, is in charge
of Allstate's attempts to buy the RBSi portfolio, which includes the Direct
Line and Churchill brands. Mr Harrison previously headed up Lehman's financial
advisory team in New York.
Allstate is also being advised by the City corporate finance house Fenchurch
Advisory. Ian
Chippendale, a former chairman of RBSi, is listed
as an adviser to Fenchurch,
as is John Tiner,
the former chief executive of the Financial Services Authority. Allstate
has no insurance operations outside of the US, having previously sold
its German and Italian car units to RBS in 2001.
Reports last week suggested that Zurich has lined up financing from a
number of investment banks, including Credit Suisse and Deutsche Bank.
It is thought to be readying an all-cash offer.
A source close to the bidding process said: "The offers being mooted are
falling way short of the valuation slapped on the business by RBS. But
it's still early."
Sources close to the bidding have criticised the raft of leaks during
the process, with one saying: "A lot of people have been put off by the
amateurish handling. People have been afraid to put anything down in writing
until the last minute for fear of reading the details in the paper."
Earlier this month RBS's beleaguered chief executive, Sir Fred Goodwin,
said he "would not be holding my breath" that the RBSi unit could be sold
off. Sources close to the deal have long warned that Sir Fred is prepared
to walk away if the bids fall short of his lofty valuation.
Sale information packs were originally sent out to eight prospective bidders,
but four groups, China's Ping An, Italy's Generali, US-based AIG and Warren
Buffett's Berkshire Hathaway, have all dropped out.
Private equity bidders were excluded from making any offers amid concerns
from RBS that buyout groups would find it difficult to raise financing
in the current environment.
Spokesmen for both Lehman Brothers and Fenchurch declined to comment.